Shougang Langze, Sinopec units team up on 50,000 mt/y China SAF project

Shougang Langze, a Hong Kong-listed steelmaker, has signed a cooperation framework agreement with two Sinopec-affiliated institutions to convert industrial waste gas into sustainable aviation fuel, a deal that could open a new domestic feedstock pathway for China's nascent SAF supply chain.

The agreement Oct. 12 reported by multiple local media outlets brings together Shougang Langze, Sinopec Petrochemical Research Institute Co. Ltd. and Sinopec Ningbo Engineering Co. Ltd. in a tripartite arrangement centered on the Ningxia Shizuishan bioethanol-to-SAF project in northwestern China.

Shougang Langze is a company in the global carbon capture, utilization and storage (CCUS) industry founded as a strategic joint venture between the Chinese state-owned steel titan Shougang Group and American carbon-recycling innovator.

The deal is significant for regional aviation fuel trade flows because it targets an industrial waste gas feedstock route rather than conventional agricultural biomass to produce SAF, potentially reducing feedstock competition and costs at a time when Chinese airlines face growing pressure to source domestically produced low-carbon jet fuel ahead of tightening international carbon regulations.

Project details

The core of the collaboration is advancing a project with an annual production capacity of 50,000 metric tons of SAF derived from industrial waste gas converted into ethanol, according to the company's voluntary announcement, as cited in multiple local media reports.

The three parties will work across two main axes: upstream gas source development using microbial fermentation of industrial waste gas to produce ethanol, and downstream extension into green, high-value-added ethanol products.

Beyond the initial SAF project, the partners will jointly develop a new technology combining carbon dioxide electroconversion with bio-fermentation to produce ethanol, a process that could significantly broaden the feedstock base by utilizing CO₂ emissions directly.

The collaboration will also target expansion into bio-based new materials, including bio-based ethylene derived from green ethanol, building what the company described as a full industrial system of "multiple gas sources — green ethanol — biofuels and bio-based new materials," according to the announcement as reported by the Caizhong News Agency.

The division of roles reflects complementary strengths across the three partners.

Sinopec's Petrochemical Research Institute, a research body directly under Sinopec, holds proprietary technology reserves in bioethanol-to-SAF synthesis, CO2 inversion-to-syngas production, and ethanol-to-ethylene conversion, according to reports.

Sinopec Ningbo Engineering brings engineering, procurement and construction capabilities for industrial-scale project delivery. Shougang Langze contributes existing industrialization capacity in ethanol production from industrial waste gas, according to the reports.

The Ningxia Shizuishan location is notable given the region's concentration of heavy industrial activity, which generates substantial volumes of waste gas that could serve as low-cost, large-scale feedstock for the fermentation process, potentially giving the project a structural cost advantage over crop-based SAF routes.

Market implications

The agreement positions Shougang Langze at the intersection of China's steel-sector decarbonization drive and the country's accelerating push to develop domestic SAF supply, aligning with what GPLP described as "dual-carbon goals and the direction of aviation carbon reduction."

China has set ambitious targets to reduce aviation emissions, and international frameworks are increasing the commercial imperative for Chinese carriers to secure verifiable low-carbon fuel supplies.

The 50,000 mt/year project, at commercial scale, would represent a meaningful incremental addition to China's domestic SAF production base, which remains limited relative to projected demand from Chinese airlines. The bio-based ethylene downstream extension also signals an intent to capture higher-margin petrochemical derivatives, potentially competing with conventional naphtha-based ethylene in regional markets.

Platts, part of S&P Global Energy, assessed Sustainable Aviation Fuel HEFA-SPK FOB China, reflecting ISCC-EU certified cargoes, at $2,295/mt Oct. 12, down $65/mt from Oct. 9.