Dongfang Shenghong has invested approximately 13.33 billion yuan in a new project to improve the efficiency of the aromatic compounds industry chain
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On April 10, 2026, Dongfang Shenghong issued a announcement stating that its wholly-owned subsidiary at the third level, Hongke New Materials, had signed a Letter of Intent for Cooperation with the Management Committee of the East-West-South Regional Cooperation Demonstration Zone (Xuwei New Area, Lianyungang). Under this agreement, the company plans to invest in a new project aimed at improving the efficiency of the aromatic compounds industry chain in Xuwei New Area; the total investment for this project is estimated to be around 13.33 billion yuan. The construction is expected to mainly include 10 key units, such as 150,000 tons per year of TDI, 50,000 tons per year of HDI, 300,000 tons per year of PC, 240,000 tons per year of caustic soda, and 240,000 tons per year of bisphenol A. Lianyungang Hongke New Materials Co., Ltd. was established on December 23, 2021. It is a third-level wholly-owned subsidiary of Dongfang Shenghong, and is 100% controlled by Shenghong Refining & Chemicals (Lianyungang) Co., Ltd. It is an enterprise under the Shenghong Group that is engaged in the manufacturing of chemical raw materials and chemical products. The company invested in the launch of the biodegradable materials project (Phase 1) in 2022, with a total investment of 7.471 billion yuan. Bid Section 2 of the Hongke Degradable Materials Project (Phase I) is a new project, planned to be constructed in the petrochemical industry park of Xuwei New Area in Lianyungang.
The project was originally planned to use n-butane produced by the Shenghong refining and chemical integration project, along with PTA produced by Honggang Petrochemical, as main raw materials to manufacture products such as PBAT resin, with an annual production capacity of 120,000 tons. The first phase of the Hongke biodegradable materials project will mainly involve the construction of a 200,000-ton/year maleic anhydride plant, a 150,000-ton/year BDO plant, and a 120,000-ton/year PBAT plant; it is expected to be completed and put into operation by August 2025. However, on October 31, 2024, Dongfang Shenghong issued a statement announcing a suspension of the implementation of the Degradable Materials Project (Phase I) by its subsidiary, Lianyungang Hongke New Materials Co., Ltd. Regarding the progress of the project and the reasons for the delay, the company stated in its announcement that as of now, the project is in the preliminary construction phase. In light of the actual development plans and market changes, the company has re-examined and assessed this project. Adhering to a prudent approach, the company intends to suspend further work on the Degradable Materials Project (Phase I), and requests the board of directors to authorize the company’s chairman to restart the project at an appropriate time, depending on the external environment, market demands, and the company’s operational conditions. The main reason for this is that the new production capacity of BDO and PBAT far exceeds the actual demand at this stage; as a result, most manufacturers are unable to operate their plants normally. The surplus supply has led to fierce competition in the market, with product prices falling below cost levels. Moreover, Dongfang Shenghong’s performance has declined significantly – it achieved revenue of 108.3 billion yuan in the first three quarters of 2024, with a net loss of 1.4 billion yuan – which means it can no longer afford to make large-scale investments. Today, Lianyungang Hongke New Materials has made significant investments in TDI, HDI, and PC new materials, and will compete with global chemical giants such as Covestro and Wanhua Chemical.
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