China's Sinopec Breaks Ground in Carbon Fibre as Asia Drives New Materials Shift

China Petroleum & Chemical Corporation (Sinopec) has achieved a series of advancements in the carbon fibre sector this September, marking significant progress in the country's high-end materials industry.

In September, Sinopec's independently developed 60K large-tow carbon fibre product made its debut at the 28th China International Composites Exhibition, held from 16th to 18th September. Hailed as a domestic first, this innovation effectively fills a market gap and establishes a comprehensive product portfolio spanning 24K to 60K that encompasses both general-purpose and high-performance applications. On 23rd September, Sinopec delivered its 48K large-tow carbon fibre products, specifically designed for wind power applications, to CRRC in Shanghai. This shipment signifies a major breakthrough in the large-scale application of proprietary large-tow carbon fibre technology within the wind power sector. Additionally, Sinopec made a strategic capital investment in Zhongjian Technology, a manufacturer of aerospace-grade high-performance carbon fibre, leveraging mutual strengths to jointly develop an industrialised, scaled ecosystem for high-performance carbon fibre. In recent years, Sinopec has accelerated technological breakthroughs and industrial upgrades in chemical new materials such as high-performance carbon fibre, fostering deep integration between scientific and industrial innovation.

The Strategic Shift in Global Chemical Materials

Chemical new materials, defined as substances produced through chemical synthesis and certain composite materials derived from secondary processing, serve as a vital component of the new materials industry. They constitute core pillars for national high-end manufacturing and defence security, while also representing key battlegrounds in global strategic competition.

As the world's largest consumer and primary growth engine, China is profoundly reshaping the global industrial landscape of chemical new materials. Amidst evolving international dynamics and rapid development in emerging sectors, distinct trends are emerging in investment directions, regional focus, and operational models.

Investment Direction: From Traditional to Emerging Sectors

The global chemical new materials market reached 3.2 billion yuan by 2024. Driven by emerging sectors including electronics and information technology, green and low-carbon initiatives, and healthcare, specialised products like electronic chemicals and specialised membrane materials are experiencing accelerated growth. S&P data indicates that annual growth rates for electronic chemicals used in integrated circuits and specialised membrane materials both exceed 5%, while demand for traditional oilfield chemicals continues to decline.

China's demand is upgrading in tandem with global trends. Total demand is projected to reach 50 million tonnes by 2025, with one-third reliant on imports. Categories like electronic chemicals and high-performance fibres are expected to grow at over 10% annually. By 2030, China's chemical new materials market is anticipated to exceed 70 million tonnes, achieving a compound annual growth rate of 7%–significantly higher than the global average of 3.7%.

Artificial intelligence and strategic emerging industries continue to drive explosive growth in sectors such as humanoid robotics, low-altitude economy, and intelligent driving, thereby boosting demand for high-performance fibres, engineering plastics, and electronic chemicals. For instance, China's humanoid robot market is projected to reach 100 billion yuan by 2030, growing at an annual rate of 82%, fuelling surging demand for carbon fibre and high-performance plastics.

Companies including BASF and Kingfa Science have strategically positioned themselves in sectors like humanoid robotics and low-altitude economy. The green transition is also accelerating the low-carbon transformation of materials. Firms such as BASF and Dow Chemical are actively developing products like bio-based polyolefin elastomers and bio-based ethylene-vinyl acetate copolymer, while significant progress has been made in carbon dioxide synthesis material technologies.

Investment Focus: Asia-Pacific Emerges as Global Hub

Leveraging manufacturing clusters, cost advantages and policy support, the Asia-Pacific region has become the most dynamic destination for global investment in chemical new materials.

BASF exemplifies this strategic shift eastwards. The company is gradually phasing out low-differentiation, less competitive production capacity in Europe, instead prioritising investments in the Chinese and Indian markets. Among these, the integrated site in Zhanjiang represents an investment of €10 billion (approximately RMB 78.5 billion), marking BASF's largest overseas project. Upon completion, it will become Asia's largest production base and the world's first integrated site to fully implement intelligent technologies.

Furthermore, BASF has increased its annual production capacity of diphenylmethane diisocyanate in Chongqing from 400,000 tonnes to 530,000 tonnes and established a polyurethane technology development centre in India.

Under China's dual circulation strategy, the rapid development of 'new consumption' and 'hard technology' has driven robust demand for critical and scarce chemical new materials, attracting both global and domestic enterprises to accelerate their strategic deployments. Since 2021, foreign investment in China's new chemical materials sector has added over 7 million tonnes per annum of capacity, concentrated in high-end polyolefins and engineering plastics. Participants include international giants such as ExxonMobil, Saudi Basic Industries Corporation, BASF, Shell, and Covestro.

Concurrently, as major refining and petrochemical projects come online, Chinese enterprises are actively transitioning towards new materials sectors with strong anti-cyclical resilience, achieving continuous technological breakthroughs. For instance, Wanhua Chemical has broken the technological monopoly on polyamide 12, holds China's top market share for polymethyl methacrylate optical films, and has advanced the application of products like polyvinyl chloride and polycarbonate into the medical sector. Kingfa Science & Technology has comprehensively expanded into high-performance engineering plastics like polyether ether ketone and polyphthalamide, with its modified plastics business serving core clients including renowned automakers like BYD.

Investment Model: Collaboration Drives Industrial Upgrading

Leading chemical enterprises have transitioned from single-product suppliers to providers of customised solutions. A vertically integrated ecosystem centred on customer needs–spanning R&D, production and application–is emerging as a new paradigm for enhancing global competitiveness.

At the 2025 International Plastics & Rubber Exhibition, BASF articulated its sustainable development philosophy of 'co-creation and mutual benefit', unveiling multiple collaborative products: partnering with China's Shixi to define the future of 'green feeding'; collaborating with Hyundai Kia to unveil the EV3 Study Car concept vehicle; and partnering with Weier Low-Carbon Technology to develop advanced plastic fuel tanks for commercial vehicles.

Wanhua Chemical similarly positions customer synergy as a key driver of R&D, establishing collaborative mechanisms with leading users across photovoltaics, electronics, and healthcare sectors. For instance, its joint venture with photovoltaic encapsulant leader Fosster advances POE product applications while securing early market positioning, demonstrating end-to-end integration capabilities from technology to commercialisation.

The year 2024 marked a pivotal period for policy developments in China's capital markets, catalysing increased M&A activity among chemical enterprises with transaction values rising 20% year-on-year. Chinese chemical firms strengthened industrial chain synergies through strategic restructuring and sector-specific consolidation. Notable moves included Haohua Technology's acquisitions of Sinochem Blue Sky and Yantai Salt Lake, alongside its collaboration with China Minmetals to integrate potash resources.

Pathways to Enhanced Global Competitiveness

China's chemical new materials industry confronts multiple challenges, including insufficient international competitiveness and pronounced structural contradictions. Compared with leading international enterprises, China remains highly reliant on imports for high-end products such as semiconductor photoresists and medical polymers, while facing overcapacity and severe homogenisation in basic products. Enterprises are generally small in scale, with fragmented innovation investment.

Despite promising prospects, the global chemical new materials sector collectively grapples with high technological barriers in premium segments, supply chain coordination challenges, and protracted innovation cycles. Moving forward, national industrial policy support, multinational strategic collaborations among enterprises, and sustained technological innovation will determine each nation's standing within the global chemical new materials landscape.

To enhance global competitiveness, Chinese chemical enterprises should first focus on national strategic needs by strategically positioning themselves in core materials required for emerging and future industries, such as electronic chemicals, high-performance fibres, and pharmaceutical intermediates.

Secondly, in their development pathways, they should align with their own business requirements. Through capital operations such as equity integration, strategic partnerships, and mergers and acquisitions, they should actively promote specialised integration across sectors, industries, enterprises, and ownership structures. By concentrating resources, they can achieve rapid technological breakthroughs, enhance industrial concentration and economies of scale, thereby strengthening control over the industrial chain.

Thirdly, drawing inspiration from the deep collaboration practices of companies like BASF and Wanhua with downstream clients, they should transition from single-product suppliers to service providers offering systematic solutions. This involves delivering comprehensive, customised services and solutions guided by client needs, discerning and fulfilling their bespoke requirements. Concurrently, capital partnerships can be employed to forge deeper ties with end-users, actively expanding into high-end sectors like healthcare and electronics to achieve collaborative innovation across the entire industrial chain.

Finally, establish specialised operational entities tailored to the characteristics of new chemical materials. Develop a comprehensive management model and performance evaluation system spanning project initiation, R&D, and sales. This will provide robust institutional safeguards for the incubation and commercial application of innovative outcomes, ultimately achieving coordinated development and enhanced competitiveness across the entire industrial chain.