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Shell Targets Polycarbonate Market to Set Up Plant in China

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Royal Dutch Shell plc (RDS.A - Free Report) recently entered into a memorandum of understanding (MoU) with China’s state owned CNOOC Limited (CEO - Free Report) to establish its first polycarbonate (PC) production facility. The plant, with an expected capacity of 260,000 metric tonnes of PC per annum, would be sited at their jointly owned chemical complex located in Huizhou, China. In the meantime, Shell has already commenced the construction of a PC unit at its chemicals plant in Jurong Island, Singapore.

Rationale Behind the Deal

The objective of this deal is to establish a commercial-scale plant which would mark Shell’s entry in the polycarbonate market. PC, used in the manufacturing of automotive parts, electronic components and eyewear, to name a few, are transparent and impact-resistant polymers. The addition of PC to Shell’s differentiated product basket will pave way for growth in the chemical business.  Along with PC, the production unit will also manufacture alkyl carbonates, required in lithium ion batteries.    

Shell plans to combine its patented diphenyl carbonate (DPC) process technology with melt-phase PC technology licensed from German company EPC Engineering & Technology GmbH. DPC, which has been developed over the years by Shell, has noteworthy advantages in terms of costs, safety, efficiency and CO2 footprint. 

About Shell

Shell is a global group of energy and petrochemical companies. It is involved in all phases of the petroleum industry from exploration to final processing and delivery. It currently carries a Zacks Rank #3 (Hold). Its earnings beat the Zacks Consensus Estimate by 5.0% on average in the last four quarters.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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