Chemical industry prices continue rising; core stocks strengthen their primary uptrend—continue prioritizing core chemical stocks!

1) Currently, domestic industry leader Wanhua Chemical accounts for a relatively high share of capacity—approximately 60% of China’s total capacity—and with the gradual exit of overseas capacity in recent years, Wanhua’s global capacity share has reached 33%. 2) Global TDI capacity expansion has significantly slowed: only Covestro’s Shanghai facility is scheduled to add new capacity in 2026, and Hu Lu’s planned 300,000-ton TDI capacity is the sole other addition currently under planning for 2026. The supply-side growth inflection point is clearly evident. 3) Demand is being strongly driven by exports: In 2025, China’s cumulative TDI exports reached 556,500 tons, up +51.84% year-on-year; export volume now accounts for over 35% of domestic production. This robust export growth is expected to offset headwinds from the domestic real estate sector. Overseas MDI prices are rising frequently—watch for pricing upside potential amid low inventory and high operating rates. Recently, major overseas producers have repeatedly raised MDI prices: BASF announced a $200/ton increase for MDI in ASEAN markets effective February 25, 2026; Covestro raised MDI prices in North America by $220/ton effective February 19, 2026; Huntsman raised MDI prices in the U.S. by $260/ton effective February 17, 2026. The latest weekly MDI plant operating rate stands at ~87%, placing it at the 81st percentile historically; inventory levels sit at the ~14th percentile—indicating a combination of low inventory and high operating rates. As ongoing U.S. interest rate cuts continue to drive down 30-year mortgage rates, U.S. existing-home sales—down an average of 16% year-on-year since January 2024—may enter a recovery phase, thereby boosting MDI demand. Relevant companies: Wanhua Chemical (MDI capacity: 3.8 million tons/year; TDI capacity: 1.47 million tons/year; under-construction MDI capacity in Fujian: 0.7 million tons/year), Cangzhou Dahua (TDI capacity: 160,000 tons/year). Wanhua Chemical—target market capitalization: RMB 400 billion. Wanhua holds 3.8 million tons/year of MDI capacity. With BASF raising MDI prices in ASEAN by $200/ton on February 25, 2026; Covestro raising MDI prices in North America by $220/ton on February 19, 2026; and Huntsman raising U.S. MDI prices by $260/ton on February 17, 2026, Wanhua’s MDI business offers greater pricing elasticity. We anticipate a recovery in China’s MDI export demand this year, supported by U.S. rate-cut-driven demand and industry-wide price-support expectations amid peers’ weak profitability. 1. Company earnings bottomed out in 2025: Net profit of ~RMB 12–12.5 billion in 2025 represents Wanhua’s medium-to-long-term earnings floor; 2026 net profit is projected at RMB 16 billion (RMB 2.5 billion improvement from petrochemicals + RMB 1 billion turnaround from new energy). 2. Upside potential lies in pricing elasticity from 4 million tons of XDI (MDI + TDI) capacity: With current annual MDI + TDI sales exceeding 4 million tons, every RMB 1,000/ton price increase adds ~RMB 3.4 billion to profit. 3. Current polymer MDI price: RMB 14,200/ton—within the 12th percentile of the past three years (2022–2025 range: RMB 13,625–18,600/ton); current TDI price: RMB 14,613/ton—within the 26th percentile of the past three years (2022–2025 range: RMB 10,281–26,500/ton). 4. In late 2025, Wanhua raised MDI prices overseas by $200/ton. So far, Europe and Southeast Asia have accepted this increase; acceptance in other regions remains under observation.

Recent progress on PetroChina and Sinopec’s large-scale ethylene projects

In November, several million-ton ethylene projects by the ‘two national oil companies’ were launched one after another: ● November 13: Hainan Refining & Chemical’s 1-million-ton ethylene project—the ‘flagship’ 1-million-ton/year ethylene unit—reached mechanical completion (handover). The Hainan Refining & Chemical 1-million-ton/year ethylene and refinery expansion project is a key national petrochemical industry initiative and a priority project for both Hainan Province and Sinopec, with a total investment exceeding RMB 28 billion. Major construction components include a new 1-million-ton/year ethylene unit, two 300,000-ton/year PE units, a 200,000-ton/year EG unit, a 200,000-ton/year loop-process PP unit, and a 250,000-ton/year gas-phase PP unit. ● November 12: PetroChina Jilin Petrochemical’s refining and chemical transformation & upgrading project—a 1.2-million-ton/year ethylene unit—broke ground. The unit employs Sinopec Engineering Construction Co., Ltd.’s ethylene technology and will annually produce 1.2 million tons of polymer-grade ethylene and 587,000 tons of polymer-grade propylene, along with co-products including hydrogen, mixed C4, cracked gasoline, cracked diesel, and cracked fuel oil. Upon commissioning of the new ethylene and downstream units, Jilin Petrochemical’s total ethylene capacity will reach 1.9 million tons/year. ● November 3: The pre-feasibility study report for Lanzhou Petrochemical’s ethylene revamp project passed its initial review and assessment, and the project preparatory team was formally established. Lanzhou Petrochemical’s ethylene revamp project utilizes PetroChina’s proprietary technology; upon completion, it will comprehensively upgrade the quality and competitiveness of Lanzhou Petrochemical’s ethylene industry. Additional upcoming projects include Lanzhou’s 1-million-ton/year new materials unit and Changqing Phase II’s 1.2-million-ton/year ethane-to-ethylene unit. Both ethylene units are scheduled for completion and commissioning in 2026. According to the ‘China Light Hydrocarbon Industry Development Blue Book (2021–2022)’, as of end-2021, China had approximately 60 ethylene producers, with total capacity reaching 42.3 million tons/year. In terms of participating entities, the industry has evolved into a competitive landscape dominated by Sinopec and PetroChina, with broad participation from other enterprises. Notably, industrialization of diversified feedstock routes—including coal-to-olefins (CTO) and methanol-to-olefins (MTO)—has been successfully achieved, driving diversification among ethylene investment players. Amid mounting pressure from private-sector mega-refineries such as Hengli and Rongsheng, as well as foreign-invested mega-ethylene projects—including BASF’s Zhanjiang and ExxonMobil’s Huizhou facilities—the ‘two national oil companies’, which long held absolute dominance in the refining & petrochemical sector, have finally begun ramping up efforts! PetroChina Ethylene Project Progress Guangdong Petrochemical Project On November 9, 2022, Guangdong Petrochemical’s 800,000-ton/year full-density polyethylene (FDPE) unit successfully produced qualified pellets, marking the successful completion of integrated commissioning tests for China’s largest FDPE unit under PetroChina. The pelletizing–silos–pneumatic conveying system achieved full-line integration. Lanzhou Petrochemical’s Three Million-Ton Ethylene & New Materials Units On November 2–3, 2022, Lanzhou Petrochemical’s ethylene revamp project pre-feasibility study report passed its initial review and assessment. Three million-ton-scale ethylene and new materials units will be constructed sequentially: Lanzhou’s 1.2-million-ton/year ethylene unit, Lanzhou’s 1-million-ton/year new materials unit, and Changqing Phase II’s 1.2-million-ton/year ethane-to-ethylene unit. Dushanzi Petrochemical Tarim Ethane-to-Ethylene Project On August 30, 2022, Dushanzi Petrochemical’s Tarim Petrochemical Branch ethane-to-ethylene project celebrated its first anniversary of operation, having cumulatively produced 593,000 tons of ethylene.

Haldia Petrochemicals to Start Olefin Conversion Unit in Q4

8 hours ago

Haldia Petrochemicals plans to commission its olefin conversion unit in Q4 2026 to support a new integrated phenol complex. The facility will produce 345,000 metric tons annually of phenol and 215,000 metric tons of acetone.

chemweek

2026-06-30

Fire Hits Haldia Petrochemicals Pipeline in Eastern India – Reports

2026-06-30

Haldia Petrochemicals naphtha blast unlikely to impact polymer output

2026-09-09

Haldia Petrochemicals aims to use more LPG as Iran war threatens feedstock supplies

2026-09-17

Haldia Petrochemicals eyes LPG, new supply sources to reduce Middle East dependence

2026-10-05

India's Haldia to Revamp Feedstock Mix After Middle East War Hit Supplies, Executive Says