Hengyi Petrochemical (000703-SZ) has announced a CNY 25.7 billion investment to build a 2.4 million-ton-per-year coal-to-ethylene glycol (EG) plant in Turpan, Xinjiang, aiming to secure polyester feedstock supply and reduce dependence on oil price volatility. The project, slated for first-half 2028 startup, signals a major shift in China's glycol sourcing strategy, directly impacting global polyester and PET supply chains.
Project overview
The facility, to be built by wholly-owned subsidiary Hengyi Energy Technology (Turpan) Co., Ltd., will be located in the Turpan Economic Development Zone's Coal-Based New Materials Circular Industry Park. The construction period is three years, with commercial operation targeted for the first half of 2028. The complex will include gasification, purification, H2/CO separation, ammonia synthesis, DMO, and EG units, forming a complete coal chemical chain.
Strategic rationale
China's energy structure is "rich in coal, poor in oil," making coal-to-glycol technology a strategic alternative to conventional oil-based EG production. By integrating upstream coal chemical capacity, Hengyi aims to stabilize polyester feedstock supply and insulate itself from international crude oil price swings. Ethylene glycol is a critical raw material for polyester fiber, PET bottles, and antifreeze, making this investment directly relevant to textile and packaging industries worldwide.
Financial context
Hengyi reported Q1 2026 revenue of CNY 29.948 billion, up 10.23% year-on-year, and net profit of CNY 1.995 billion, a surge of 3,773.77% year-on-year. The profit jump was driven by geopolitical tensions that widened spreads for refined oil products and paraxylene (PX), boosting margins at its Brunei refining and petrochemical complex. The company's strong cash flow supports this large-scale coal chemical expansion.
What buyers should watch
Overseas importers of polyester, PET, and glycol should monitor this project's progress as it will add significant coal-based EG capacity to the market by 2028. This could pressure oil-based EG prices and alter regional supply dynamics. Additionally, Hengyi's parallel CNY 1 billion investment in a 300,000-ton recycled materials demonstration project in Jingzhou, Hubei, signals growing interest in circular economy feedstocks, which may affect virgin material demand.
China sourcing context
China's coal-to-glycol capacity expansion is reshaping the global EG market. Buyers sourcing from China should track coal price trends, environmental compliance costs, and potential export restrictions on coal-derived chemicals. The Xinjiang project's remote location may also impact logistics costs and delivery timelines for international customers.
Source: Read the original report | Published: May 16, 2026