China’s State Council approves ChemChina-Sinochem merger

China’s State Council, the nation’s highest decision-making body, has approved a plan to combine ChemChina and Sinochem. The state-owned chemical firms will become subsidiaries of a new holding company, which will combine their assets and operations. In a statement, Sinochem says the merged company will be “led by life science and materials science, supported by basic chemicals and environmental science,” and will prioritize sustainable development. Sinochem posted 2019 sales of $89 billion from oil, petrochemicals, and agricultural chemicals as well as from real estate and finance. ChemChina’s portfolio includes specialty chemicals, agrochemicals, petrochemicals, and chemical engineering equipment and services. The firm had $67 billion in sales in 2019. The overlap between the business lines of the two firms will create cost-cutting opportunities, according to Moody’s Investors Service, while combining areas they don’t have in common will create diversification. Moody’s says the merged group will “likely receive very high support from the central government.”