The Wall Street Journal is reporting that the Chinese state-owned Chemical company Sinochem, has agreed to sell its ‘Sinochem International Logistics’ business to a consortium led by a private sector coal entrepreneur. The newspaper reports that the price agreed between Sinochem and the ‘Junzheng Energy & Chemical Group’ is said to be in the region of CNY3.5bn (US$550m) although this has not been confirmed. Sinochem International Logistics is reported to have revenue of CNY4bn and profit of CNY435m.

Having grown vigorously since its establishment in 2005, Sinochem International Logistics is now a substantial operation and almost certainly the largest operator of chemical logistics within China. Its infrastructure stretches across most of the country, with a focus on the three main areas economic regions of Tianjin & Bohai Bay, the Yangtze Valley and the Pearl River Delta. It also has capabilities in the international chemical trade. Perhaps its most unique asset is the network of eight sea and river terminals. These are generally located at or near to major container terminals and include not just intermodal transport capabilities but also bulk storage and hazardous cargo warehousing. Yet it is Sinochem International Logistics’ fleet of 80 sea-going chemical tankers that is its largest capital investment. It is believed to be approximately 1.5m tonnes in size and complemented with a fleet of tank containers.

Rumours suggested that there were disagreements within Sinochem about the sale, possibly concerning the levels of debt to be assigned to Sinochem International Logistics. The intention to sell the company had been indicated in the middle of last year, yet the agreement is said to have to been agreed recently.

Various reports imply that the wider Sinochem Group is under pressure to rationalise its portfolio of businesses, including its oil exploration & production businesses, both to make the management of the company easier but also to reduce its debt levels. However, Sinochem International Logistics has also indicated in the past that its requirements for capital are substantial and this may also have played a role in the sale. Either way, in the Junzheng Energy & Chemical Group, it appears that the world has a new third-party chemical logistics company.

Source: Transport Intelligence, April 16, 2019

Author: Thomas Cullen