In a sleepy Louisiana town, two Chinese chemicals firms are being hit on multiple fronts by the trade war
- Shandong companies Yuhuang Chemical and Wanhua Chemical are spending billions on factories but are being hit by both tariffs from China and the United States
- US companies are also being hit by Donald Trump’s tariffs which are threatening ‘renaissance’ in the American chemicals industry
US President Donald Trump’s trade war with China has thrown a spanner in the works of two Chinese chemicals companies spending billions of dollars building factories in the United States.
Yuhuang Chemical was started in 1994 by a village branch of the Chinese Communist Party in Shandong Province, but in 2014, it raised some eyebrows when it announced plans to build a US$1.85 billion methanol plant in St James Parish, Louisiana.
Last year, Wanhua Chemical, a listed company also from Shandong, followed suit with plans to build a US$1.25 billion plant in the same town in Louisiana, which has a population of just 21,367.
Both companies were attracted to this sleepy town in the Deep South because of its proximity to America’s booming shale gas industry, which gives chemicals companies cheap access to the components they need to make their products.
In 2017, the US produced 71.1 billion cubic feet of natural gas per day, more than any other country in the world, with large swathes of that coming from newly-discovered shale gas, buried deep underground within shale rock formations.
Chemicals companies from China, Japan and Taiwan have been flocking to the US’s shale hubs, drawing up manufacturing blueprints that would allow them to tap the abundant and cheap energy stores.