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Chinese refiner Chambroad set to start bitumen plant in Hainan

(Reuters) - China's Chambroad Petrochemicals is set to start operating a refining unit in the southern province of Hainan in May to produce mainly bitumen with an aim to export the material used to pave roads, the independent refiner's chairman told Reuters.

Chambroad is one of about 60 independent refineries in the refining hub of Shandong province, an industry facing mounting challenges from fuel oversupply, competition from new mega plants and increasing regulatory scrutiny.

Chambroad bought the Hainan facility for about $218.5 MM in late 2021 from Shandong High-speed Group, a state-owned builder and operator of expressways, chairman Luan Bo told Reuters on Friday.

The plant, which can process four million tons of feedstock annually, is in Hainan's Yangpu port. Beijing designated the island province as a free-trade zone in 2018.

The new facility will boost Chambroad's bitumen capacity from three million to five million tons annually, making it China's single largest producer of the material.

Chambroad aims to take advantage of anticipated growth in demand as China expands infrastructure spending to spur its economy, with an eye also to exporting some of the bitumen to southeast Asian nations such as Vietnam, Luan said.

"We hope to further grow our business strength by expanding into the overseas market, capitalizing on government policy to build Hainan into a free-trade zone and its proximity to the southeast Asian market," he said.

Chambroad hopes Beijing will allow it to import crude oil for the new plant without requiring quotas, Luan said. Alternatively, it plans to process heavy feedstocks such as bitumen blend and vacuum gas oil, or fuel oil, company officials told Reuters separately.

Beijing has since 2021 tightened crude imports by independent refiners, known as teapots, to rein-in swelling capacity that outpaces demand, forcing some plants to secure other feedstocks.

The Yangpu plant is adjacent to oil storage and port facilities run by State Development and Investment Corp, as well as a refinery complex run by state refiner Sinopec Corp .

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