Dongfang Shenghong boosts refining capabilities; plans to invest 3.455 billion yuan in a delayed coking transformation project

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On April 3, Jiangsu Dongfang Shenghong Co., Ltd. (hereinafter referred to as “Dongfang Shenghong”) issued a announcement stating that in order to ensure the production of high-value petroleum coke products from its delayed coking units, increase the added value of these products, further enhance its competitive advantages in the refining and chemical industry, and boost the market competitiveness of its refining business, its wholly-owned subsidiary Shenghong Refining (Lianyungang) Co., Ltd. (hereinafter referred to as “Shenghong Refining”) plans to invest in the construction of a coking feedstock pretreatment facility with an annual capacity of 2 million tons, along with related supporting facilities. The total investment for this project is estimated to be around 3.455 billion yuan, with a construction period of approximately 2 years. The announcement states that the project is located in the Petrochemical Base of the East-West-Central Region Cooperation Demonstration Zone in Lianyungang, Jiangsu, covering an area of 28,200 square meters. The main facility to be built is a coking feedstock pretreatment plant with an annual capacity of 2 million tons, along with supporting facilities such as cabinet rooms, substations, and process heating and cooling networks. The estimated investment for construction is around 3.329 billion yuan, with funds to come from internal resources and bank loans. Currently, the project is in the preliminary design stage. This investment matter has been approved and does not require review by the shareholders’ meeting; it also does not constitute a related-party transaction or a major asset restructuring under relevant regulations. It is understood that the project focuses on desulfurization and demetallization of the raw materials used in coking units, aiming to improve the quality of petroleum coke by enhancing the suitability of these raw materials. Once operational, it is expected to generate annual revenue of around 2.022 billion yuan, with an annual profit of approximately 388 million yuan. Dongfang Shenghong stated that the project is in line with the company’s development plans; it can help reduce raw material costs, enhance the competitiveness of the refining and chemical business, and provide a foundation for the company’s high-quality development. Once the project reaches full production capacity, it will have a positive impact on the company’s financial performance. Zhang Xiaorong, director of the Deep Technology Research Institute, told a reporter from the Securities Daily: “The refining and chemical industry is currently in a phase of optimizing its existing capacity; precise processing of raw materials has become the key approach for refineries to improve their operational efficiency.” This time, Dongfang Shenghong is focusing on technological upgrades aimed at desulfurization and demetallization of coking raw materials. By working on the raw material processing stage, it can improve the suitability of the production facilities; this not only expands the range of available raw materials and optimizes raw material costs but also enables the improvement of the quality of petroleum coke to meet the high-end demands of the market. It represents an efficient way for the company to maximize the value of its existing production capacity. ” It is reported that Shenghong Refining & Chemicals, the entity responsible for the investment, is a company under 100% control of Jiangsu Shenghong Petrochemical Industry Group Co., Ltd., which in turn is a wholly-owned subsidiary of Dongfang Shenghong. With a registered capital of 23.545 billion yuan, this company is engaged in the research, development, production, and sales of petroleum and chemical products, and it holds various licenses for the production of hazardous chemicals as well as for the storage of refined oil products. Dongfang Shenghong also notes that the project construction and operation may be subject to various uncertainties such as industry policies, economic conditions, changes in market demand, management issues, and on-site construction conditions. There are risks related to the market, management, and the possibility of failing to meet the original plans and forecasts. The figures regarding project investment amounts and construction timelines are estimates, and these will be adjusted according to actual circumstances during implementation. The company will adopt mature and reliable process routes and equipment, and arrange the project schedule properly to ensure the implementation of the project investment. In recent years, the domestic refining and chemical industry has been continuously advancing process upgrades and pursuing green, low-carbon development. The industry as a whole is steadily moving toward greater intensification, standardization, and higher quality, with corporate operations placing greater emphasis on technical reliability and long-term development quality. Zhang Xiaorong further analyzed for a reporter from the Securities Daily: \"The integrated competitive advantage of refining and chemical enterprises lies in the integration of resources across the industrial chain and the complementarity of various stages within it.\" The technological upgrade carried out by Dongfang Shenghong does not involve the addition of new production capacity; rather, it aims to optimize and improve the existing refining system. By upgrading the raw material preprocessing process, it further enhances the efficiency of plant operations and improves the stability and sustainability of overall operations. ”