Chambroad Petrochemicals, one of the approximately 60 independent refineries in the Shandong province, is set to commence operations at a new refining unit in Hainan, the southern province of China, in May. The facility will primarily produce bitumen, a key component used in road construction, with a focus on exporting the material to meet growing international demand.
The independent refining sector in China is currently grappling with challenges such as fuel oversupply, competition from larger-scale plants, and heightened regulatory oversight. However, Chambroad Petrochemicals seeks to overcome these hurdles through strategic investments and expansions.
In late 2021, Chambroad purchased the Hainan facility for approximately 1.5 billion yuan ($218.5 million) from Shandong High-speed Group, a state-owned expressway builder and operator, according to Chairman Luan Bo in a recent interview with Reuters. The plant, with a four-million-tonne annual feedstock processing capacity, is situated in Hainan’s Yangpu port, an area designated as a free-trade zone by Beijing in 2018.
This new facility is expected to increase Chambroad’s bitumen production capacity from three million to five million tonnes per year, making it the largest producer of the material in China. The company aims to capitalize on the anticipated growth in demand driven by China’s expanding infrastructure investments, as well as export opportunities in Southeast Asian countries such as Vietnam.
Luan Bo emphasized the company’s intentions to strengthen its business by extending its reach into overseas markets, taking advantage of Hainan’s free-trade zone status and its proximity to the Southeast Asian market. Chambroad hopes that Beijing will permit the import of crude oil for the new plant without imposing quotas. If not, the company plans to process alternative heavy feedstocks such as bitumen blend, vacuum gas oil, or fuel oil, according to company officials.
Since 2021, Beijing has tightened crude import restrictions on independent refiners, known as teapots, in an effort to curb excessive capacity growth that outpaces demand. This has forced some plants to seek alternative feedstock sources. The new Yangpu plant is conveniently located near oil storage and port facilities operated by the State Development and Investment Corp, as well as a refinery complex managed by state refiner Sinopec Corp.