Wanhua Chemical: Fully Operational!

At the beginning of 2025, Wanhua Chemical announced a series of major developments, including the full commissioning of the Yantai Industrial Park project, surpassing RMB 200 billion in revenue in 2024, the completion of multiple projects in Ningbo Wanhua, and the establishment of a joint venture with Xingfa Group. Amidst the sluggish chemical industry landscape, Wanhua Chemical's steadfast expansion has drawn widespread attention. Meanwhile, international chemical giants such as BASF, Dow, and Covestro have entered a phase of contraction or external investment introduction.

Next, we will analyze Wanhua Chemical’s counter-cyclical strategy from the perspectives of its polyurethane and fine chemicals businesses.

Polyurethane Business: MDI Market Prospects and Wanhua's Expansion

Wanhua Chemical's core product in the polyurethane sector, MDI, has shown strong market performance. In 2024, the price spread between polymeric MDI and benzene continued to widen, indicating a gradual increase in market demand. The commissioning of Fujian Wanhua’s 400,000-ton Phase II project and the 210,000-ton Kumho Mitsui project further strengthened MDI’s market position. Global MDI production capacity is primarily concentrated among eight companies, including Wanhua Chemical (3.5 million tons/year), BASF (2.02 million tons/year), and Covestro (1.77 million tons/year), with a total capacity of 10.89 million tons.

However, since 2024, several overseas MDI facilities have either shut down or operated at low capacity due to force majeure, including those of Covestro USA, BASF USA, Dow USA, and Huntsman Netherlands. This makes Wanhua Chemical’s expansion strategy appear particularly justified. Given the expected 3-5% annual growth in MDI demand, Wanhua Chemical's firm expansion aligns with potential supply-demand imbalances.

New Materials Business: Transitioning to High-End Downstream Sectors

Wanhua Chemical’s next development focus will shift towards downstream new materials and fine chemicals. Although heavy assets and high-tech specialization may seem contradictory, in the new materials industry, high-end end products often rely on the support of upstream heavy-asset projects. Wanhua Chemical’s petrochemical projects provide a cost advantage for its POE, Nylon 12, PC/PMMA, SAP, and other new materials businesses.

In June 2024, Wanhua Chemical announced a raw material diversification project for its 1-million-ton/year ethylene facility, switching from propane to ethane, which is expected to add 410,000 tons of ethylene capacity. This transformation will aid in expanding its fine chemicals business.

In February 2025, Wanhua Chemical’s Chairman Liao Zhengtai stated at the Yantai High-Quality Development Demonstration City Construction Promotion Conference that the company aims to enter the Fortune Global 500 in 2025 and become one of the world's top three chemical companies within five years. 2025 is a crucial year for Wanhua Chemical:

• Full commissioning of the Yantai Industrial Park project: Includes nine high-end fine chemical products (such as carotenoids, vanillin, and polysulfone) and 98 technical transformation projects. The second phase of the 1.2-million-ton/year ethylene project will start production in Q1.
• Accelerated progress of the Penglai Industrial Park project: Includes Phase II of POE, electronic materials, and high-end engineering plastics. Phase I technical upgrades will be completed in the first half of the year.
• Launch of the Dingzi Bay Wanhua Green Power Industrial Park: Ensuring the Phase I 100,000-ton/year fourth-generation lithium iron phosphate facility starts production in H1 2026.

New Materials Product Layout

Wanhua Chemical has an extensive presence in the new materials sector, covering automotive materials, coatings, high-performance medical materials, semiconductor/communication materials, and new energy materials. Below is an overview of its key product developments:

• Polycarbonate (PC): 480,000 tons/year capacity, with new capacity focusing on mid-to-high-end materials, including silicon copolymerized PC for smartphones, 5G communications, and new energy vehicles.
• (Poly) Methyl Methacrylate (MMA/PMMA): 130,000 tons of MMA capacity using the C4 process; 160,000 tons/year of PMMA capacity, capable of producing high-end optical-grade PMMA.
• Specialty Isocyanates: 68,000 tons/year supply in 2023, including HDI, IPDI, and H12MDI.
• Nylon 12: 40,000 tons/year project launched in October 2022, with full industry-chain production technology. In 2024, the company introduced Nylon 12 elastomer (PEBA) for applications in sports shoes, industrial equipment, and medical devices.
• Polyolefin Elastomers (POE): Research began in 2015; a 200,000-ton/year project was launched in June 2024, with a second 400,000-ton/year phase expected by late 2025.
• Polysulfone: 1,500-ton/year sulfone polymer project, including PSU and PPSU, for high-end medical applications.
• SAP: Current capacity of 60,000 tons/year, with a planned expansion to 500,000 tons/year.
• Cyclic Olefins (COC/COP): Planning an integrated production line within the next 2-3 years for optical applications.
• Electronic Special Gases: 50-ton ethylsilane production line to start in December 2024, with a 140-ton silane project under construction, reaching internationally advanced performance levels.
• Citral: 48,000-ton/year facility to start in August 2024, the world's largest single-unit capacity.
• XLPE/MS: Pilot production is underway in preparation for industrialization. XLPE is used in medium-to-high voltage power transmission networks, while MS resin serves as a transparent PC alternative.

R&D Investment and Market Expansion

Wanhua Chemical has consistently maintained a stable R&D investment ratio. This long-term strategy has not only led to breakthroughs in key technologies but also fostered the continuous emergence of new products and technologies, further solidifying its leading position in the global chemical industry. Since 2017, the company has doubled its sales force, primarily to expand its new materials business and meet the diverse needs of downstream applications.

Future Outlook

Wanhua Chemical's expansion is fundamentally a "counter-cyclical layout + technology-driven" strategy aimed at achieving long-term strategic goals. By building integrated industrial bases and pursuing diversified development, the company enhances its overall competitiveness. Since 2013, Wanhua Chemical has expanded into petrochemicals and new materials, significantly increasing its capital expenditure. Although large-scale petrochemical projects face short-term profitability pressures during industry downturns, the company's long-term goal is to establish a complete industrial chain from "petrochemical raw materials → new materials," ensuring raw material supply for high-end products and improving cost control across the entire value chain. With the recovery of the polyurethane market and the gradual completion of integrated base projects in Yantai and Penglai, Wanhua Chemical is expected to enter a new performance growth phase post-2025, driven by rising demand and capacity expansion.