How did the petrochemical market perform after the Spring Festival in 2022?

Driven by robust crude oil prices and boosted demand in certain sectors, the chemical industry experienced a strong post-holiday rebound—dubbed the 'Lucky Opening'—with prices rising continuously. For instance, 13 products—including n-butanol, acrylic acid, butyl acrylate, DOP, 2-ethylhexanol, butyl acetate, DBP, propylene glycol, and epoxy resin—saw price hikes exceeding RMB 1,000 per ton. Multiple domestic and international chemical enterprises suspended production and supply. In response to this 'Lucky Opening' surge at the start of the Year of the Tiger, chemical industry professionals’ first instinct was to stockpile raw materials. However, numerous suppliers subsequently announced shutdowns for maintenance—or imminent shutdowns—with some outages lasting up to 60 days. Affected products include PTA, benzene, styrene, and others; total capacity reductions approached 40 million tons. Manda Co., Ltd. began scheduled maintenance on part of its polymer production lines at its Jiangmen base on January 21, with an estimated downtime of approximately 60 days. This is expected to reduce nylon 6 chip output by about 25,000 tons and nylon 6 fiber output by roughly 11,000 tons. Lubei Chemical recently announced that its subsidiary, Sulfur-Phosphorus Technology Co., Ltd., would conduct routine maintenance on its ammonium phosphate, sulfuric acid, and cement production facilities starting January 30, with a planned maintenance duration of around 20 days. Yisheng Dalian’s latest update: Yisheng Ningbo’s 2-million-ton-per-year PTA facility underwent a two-week maintenance beginning February 10; Yisheng Dalian’s 2.25-million-ton-per-year PTA facility is scheduled for maintenance starting March 1. Yangzi Petrochemical’s 490,000-ton-per-year benzene unit will undergo maintenance for 55 days, concluding in mid-March. Maoming Petrochemical’s No. 1 high-pressure polyethylene, full-density polyethylene, SBS rubber, and No. 1 ethylene glycol units—as well as its No. 1 styrene unit—will shut down on February 25 to align with the commissioning schedule of new capacity on March 15. Zhejiang Petroleum & Chemical’s 600,000-ton-per-year styrene unit plans to shut down for maintenance mid-month, with an estimated maintenance period of about 20 days. Anhui Jiaxi’s latest update: Its 350,000-ton-per-year styrene unit has already shut down and entered maintenance. Changzhou Xinri’s 300,000-ton-per-year styrene facility began phased shutdown on January 24 and will undergo 30 days of maintenance. Additional planned maintenance in February includes Zhejiang Petrochemical’s 600,000-ton, Anhui Jiaxi’s 350,000-ton, and Maoming Petrochemical’s 100,000-ton styrene units. Shaanxi Shanhua’s BDO facility is scheduled for maintenance in mid-to-late February. Xinjiang Xinye’s BDO facility is scheduled for maintenance on February 25, expected to last five days. Beyond domestic maintenance, major overseas chemical companies have recently also encountered force majeure events.

[Industry Insights] Everything You Need to Know About Force Majeure Certificates and Response Measures

Amid the ongoing pandemic, foreign trade enterprises are under mounting pressure. Some companies face difficulties and obstacles in fulfilling contractual obligations normally, drawing widespread attention to force majeure issues arising during performance. Recently, Royal Dutch Shell plc and TotalEnergies issued statements rejecting a force majeure notice submitted by a Chinese liquefied natural gas (LNG) buyer. Since the outbreak of the novel coronavirus pneumonia (COVID-19), this marks the first time an internationally renowned energy supplier has publicly opposed a buyer’s attempt to withdraw from a contract on force majeure grounds. So how should enterprises respond to such situations? Experts offer practical strategies to resolve them. / 01 / How to Assess Whether a Force Majeure Clause Applies Tang Yi, Legal Counsel at the China Council for the Promotion of International Trade (CCPIT) Business Law Service Center, recently stated: “Based on current news reports, it remains unclear precisely what grounds the Chinese LNG buyer cited in its force majeure notice, or what specific claims it made based on that notice. We surmise that this incident primarily concerns whether the Chinese buyer has the right to assert that pandemic-related disruptions constitute force majeure—and thus claim exemption from performance obligations or even termination of the contract.” According to Tang Yi, force majeure events are common in international sales contracts. Although national laws differ in detail, generally speaking, an event qualifies as force majeure only if it satisfies three essential criteria: — It is beyond reasonable control; — It could not reasonably have been foreseen; and — It cannot be avoided or overcome. Whether a Chinese enterprise’s claim of force majeure—seeking exemption from liability or even contract termination—is accepted by its counterparty, or upheld later by courts or arbitral tribunals, depends on both the contractual terms and the governing law. Enterprises should proactively review their contract clauses. For example, in international oil and gas sales contracts, most contain ‘take-or-pay’ provisions, making it extremely difficult for buyers to invoke force majeure to refuse payment. Where contract terms are ambiguous, enterprises must refer to the governing law. The United Nations Convention on Contracts for the International Sale of Goods (CISG), ratified by 93 countries, provides detailed provisions on impediments and their legal consequences. Numerous case summaries submitted by member states to UNCITRAL also serve as highly instructive references. Moreover, to successfully claim exemption from liability on force majeure grounds, enterprises must substantiate that the force majeure event genuinely prevented them from performing their contractual obligations. / 02 / Concepts of ‘Force Majeure’ Vary Across Jurisdictions Zhao Shen, General Counsel of CSSC Leasing Co., Ltd. (a subsidiary of China State Shipbuilding Corporation), and formerly a licensed attorney in both China and New York State, USA, recently analyzed legal issues concerning the performance of cross-border contracts by Chinese shipbuilders amid the pandemic and offered recommendations. Zhao Shen noted that the concept and specific content of ‘force majeure’ differ across national legal systems. In jurisdictions where force majeure is statutorily defined, its legal effect is directly prescribed by law; whether contractual force majeure provisions bind the parties depends on whether those provisions violate mandatory statutory norms. Conversely, under the laws of countries including the United States and the United Kingdom, the legal effect of force majeure derives entirely from the precise wording of the contract clause—ranging from extension of performance deadlines, suspension of obligations during the affected period, to partial or full discharge of contractual duties. The CCPIT has already issued certificates confirming the occurrence of the pandemic and delays in resuming operations; therefore, preliminary evidence establishing that the conditions stipulated in the force majeure clause have occurred has already been satisfied.

TotalEnergies declares force majeure on Normandy toluene supply

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TotalEnergies declared force majeure on toluene supplies from its Normandy refinery due to strikes disrupting production and logistics. The strike affects xylene and toluene chains, halting deliveries from the 50,000 mt/year capacity facility.

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