(Yicai) April 27 -- Shares of Hengli Petrochemical plunged by the exchange-imposed daily trading limit even though the Chinese supplier of polyester and its core raw materials denied allegations by the US Department of the Treasury that one of its subsidiaries uses Iranian crude oil for production.

Hengli [SHA: 600346] was trading down 10 percent at CNY21.10 (USD3.09) as of lunch break in Shanghai today.

Hengli has never engaged in any trade with Iran, the Dalian-based company said in a statement yesterday. All of its suppliers have guaranteed that their crude oil does not originate from regions subject to US sanctions, it clarified.

The US Department of the Treasury’s Office of Foreign Assets Control announced on April 24 that it sanctioned Hengli Petrochemical Dalian Refinery, China’s second-largest independent oil refinery, for allegedly “having purchased billions of dollars’ worth of Iranian petroleum,” which it received through shadow fleet vessels.

Hengli has activated a special compliance response mechanism and hired a professional international sanction compliance legal team to evaluate solutions to address the US accusations, hoping to lift relevant restrictive measures as quickly as possible, it noted.

Hengli Petrochemical Dalian was also added to the OFAC’s Specially Designated Nationals and Blocked Persons List. Entities on the list are prohibited from conducting any transactions with US individuals, enterprises, and financial institutions without written licenses issued by the OFAC. Moreover, they will have all their assets within the US jurisdiction frozen.

Such sanctions may also spill over to the listed entities’ affiliated enterprises, as well as non-US firms and financial institutions that maintain business dealings with them, according to regulations.

The sanctions will not have any impact on Hengli’s other business entities, the company noted, adding that it has no subsidiaries, branches, business operations, or assets in the United States.

The firm also said that its crude oil reserves can meet downstream processing demands for more than three months, and its crude oil procurement operations remain unaffected. Hengli will continue to settle crude oil purchases in Chinese yuan and adopt a combined model of strategic reserves and market-oriented procurement to ensure the diversification and security of crude oil transaction settlements, it added.

Hengli is one of China’s leading manufacturers of polyester and its core raw material, p-xylene, ranking 18th in Chemical and Energy News’ 2025 Global Top 50 chemical companies list. Its refining business generated CNY942.8 billion (USD130.1 billion) in revenue last year, accounting for nearly half of the company’s total operating income in the period.

Hengli Petrochemical Dalian is Hengli’s core refining business entity. It serves not only as the sales hub for refined oil products, but also as the critical raw material supplier for the group’s downstream polyester and new materials sectors.

Editor: Futura Costaglione