Shanxi Sanwei: Leading International Fine Chemical Company

Three big bounds   

Since its listing in Shenzhen Stock Exchange in 1997, Shanxi
Sanwei has conducted financing in the stock market four times
and raised a total of RMB1.2 billion. In 1997 around RMB320
million raised by the company in the first open circulation of
its shares was used in technical renovation and capacity
expansion including a 20 000 t/a BDO project. In 2001 while
making further expansion to the production scale of its leading
product PVA the company accelerated technical renovation and
import and actively developed BDO downstream products with high
added value. In 2002 and 2003, the company raised totally around
RMB350 million through share allotment (issue new share to
existing shareholders). The completion of BDO and its downstream
product projects changed the mode of unitary product portfolio
in the company.
   In 2006 Shanxi Sanwei once again raised more than RMB600
million from the stock market and used it in the 75 000 t/a maleic
anhydride process BDO project, the 200 000 t/a crude benzene
refining project and the 20 000 t/a PVA expansion project. Their
completion can increase annual sales revenue of around RMB2.6
billion for the company. The capacity of BDO in the company is
also expected to be hopefully doubled in 2009 and the company
will become a world-class BDO producer.

Independent innovation

Through many years' efforts in the combination of independent
innovation and active import, Shanxi Sanwei has formed a
technical innovation system with its own special characteristic
of integrating import, cooperation, development and renovation.
Through the use of research achievements of the state, the
company has constructed the first low-pressure suspension-bed
butynediol unit in China with a capacity of 1 000 t/a. Through
the cooperation with famous universities in China, the company
has successfully conducted technical renovation to core
equipment. Through the cooperation with experts from research
units abroad, the company has developed special PVA varieties.
The company has also actively imported advanced technologies and
equipment from abroad and completed the 20 000 t/a white latex
unit with more than 40 product varieties and the first 35 000
t/a BDO unit, the first 15 000 t/a THF (terahydrofuran) unit,
the first 15 000 t/a PTMEG (polytetramethylene ether glycol)
unit, the first 10 000 t/a GBL (gama-butyrolactone) unit and the
first 15 000 t/a re-dispersible latex powder unit in China. The
R&D and import of advanced technologies has also greatly
benefited the company in energy conservation, consumption
reduction and environmental protection.

Market prospect

The market demand for organic chemicals in China is constantly
increasing. Some organic chemicals such as PVA and BDO are
already in supply shortage. Great quantities of BDO, in
particular, have to be imported from abroad each year.
    PVA: The capacity of PVA in Shanxi Sanwei is 100 000 t/a today.
Production units adopt the high-alkali alcoholysis process, the
low-alkali alcoholysis process and the kettle-type alcoholysis
process being used in the world today. The company has also
developed new processes for functional copolymerization PVA and
alcoholysis in recent years in collaboration with foreign
research units. The output of PVA in the company reached 66 000
tons in 2006, the sales amount was 67 000 tons, the domestic
market share was more than 10% and the leading position was
maintained. After the completion of the 20 000 t/a low-alkali
alcoholysis process PVA expansion unit executed with the fund
raised from the stock market this year, the capacity of PVA in
the company will reach 120 000 t/a.
    BDO: Shanxi Sanwei produced 48 600 tons of BDO in 2006. In
June 2006 the company put on stream the second 30 000 t/a BDO
unit constructed with the fund raised by the company itself. In
2007 the company started the construction of a 75 000 t/a maleic
anhydride process BDO project with the fund raised through
un-open share issuance. After the completion of the project, the
capacity of BDO in the company will reach 150 000 t/a. With the
development of downstream sectors such as PBT resin and
polyurethane fiber, the demand for BDO in the domestic market
has rapidly grown in recent years. It is expected that the demand
for BDO in China will reach more than 250 000 tons in 2009. The
widening supply gap will provide a considerable space for the
growth of the BDO business in the company.

The price of Shanxi Sanwei stock has also been skyrocketing in
2007 from RMB7.31 per share at the beginning of the year to the
highest price of RMB27.03 per share. Although its P.E has reached
60 times, Shanxi Sanwei has become the chemical company with the
greatest growth potential.