Zhenyang Development announced on the evening of September 18 that, due to the impact of Middle East geopolitical conflicts, the price of ethylene, the company's main raw material, has continued to rise, increasing product costs and weakening operating results. The company plans to temporarily halt production and conduct maintenance at its 300,000-tonne-per-year vinyl-based new materials plant, namely its PVC plant. The shutdown will begin on September 19, 2026, and is expected to last no more than four months. The company said the move is intended to reduce operating losses and improve plant performance. Other plants are operating normally. The shutdown is expected to have a certain impact on operating revenue, but can reduce operating losses. Zhenyang Development is mainly engaged in the research, development, production and sales of chlor-alkali related products. Its main products include chlor-alkali products, MIBK products, PVC products and high-purity hydrogen. In the first half of 2026, the company achieved operating revenue of 1.166 billion yuan and net profit attributable to the parent company of 2.7503 million yuan. Among these, PVC products recorded revenue of 390 million yuan and costs of 480 million yuan in the first half. The company's PVC plant uses the ethylene-based process and is significantly affected by ethylene price fluctuations. This round of ethylene price increases began in late February 2026. The escalation of Middle East geopolitical conflicts severely affected passage through the Strait of Hormuz, disrupting the transport of international crude oil, naphtha, liquefied natural gas and other raw materials, and causing prices of most chemical products to fluctuate accordingly. Guosen Securities judged that international oil prices in September will fluctuate upward in the range of 80 to 100 US dollars per barrel, and cannot rule out the possibility of periodically breaking above 100 dollars per barrel. For ethylene-based PVC producers, the rise in raw material prices has not been fully passed through to product prices. As of the end of June, the average domestic price of ethylene-based PVC was 4,628 yuan per tonne, up only 67 yuan per tonne from the beginning of the year. The fact that raw material price increases far exceed product price increases is a common problem facing the industry.
Zhejiang Oceanking Development Co LtdRising ethylene feedstock costs from Middle East conflict disruption force Zhenyang to halt its 300,000-tonne PVC plant for up to four months.
Guosen Securities Co Ltd