Shares of Sinopec Shanghai Petrochemical fell after the Chinese petrochemical giant said it plans to invest CNY21.3 billion (USD2.9 billion) on a major renovation of its refining and chemical production lines.

Sinopec Shanghai [SHA: 600688] closed down 2.8 percent at CNY2.83 (39 US cents) a share today. The broader Shanghai market fell 0.4 percent.

Sinopec Shanghai plans to undertake a comprehensive technological upgrade of its production lines and adjust its product lineup while maintaining its overall crude refinery capacity, the unit of energy giant China Petroleum and Chemical Corporation, better known as Sinopec, announced late yesterday.

The move will allow Sinopec Shanghai to better adapt to modern energy conservation, carbon reduction, and environmental protection requirements and meet market demand for high-end chemical materials in the city and surrounding areas, it noted.

The assembly line revamp will include structural adjustments to Sinopec Shanghai's existing refining facilities, according to the company. The firm will also shut 18 production units, including ethylene ones with an annual output of 700,000 tons, replacing them with new units capable of producing 1.2 million tons of ethylene a year and a series of downstream new material production facilities, it pointed out.

Construction of the project's main facilities will likely take around three years, while other units may need about five years to build, Sinopec Shanghai noted, without disclosing the type of downstream chemical products planned to discontinue and what products will be made in the new facilities.