(Yicai) May 18 -- Hengyi Petrochemical will invest CNY25.7 billion (USD3.8 billion) to build what it says will be the world’s largest single-line coal-to-ethylene glycol production facility in China’s Xinjiang Uygur Autonomous Region, as the polyester maker seeks to secure raw material supplies amid volatile global oil prices.

The project will produce 2.4 million tons of ethylene glycol annually using coal as feedstock, according to a company announcement released after the previous trading day. The investment marks a major upstream expansion for Hengyi Petrochemical and is expected to allow the company and its parent, Zhejiang Hengyi Group, to meet more than half of their combined ethylene glycol demand internally after the facility begins operations in the first half of 2028.

The planned facility will be located in Turpan and use locally abundant coal resources to manufacture ethylene glycol, a key raw material for polyester products traditionally derived from petroleum. By-products will include synthetic ammonia, ethanol, sulfur, and industrial-grade dimethyl carbonate. Hengyi Petrochemical said the project is intended to diversify raw material sources, reduce dependence on crude oil supply, and strengthen profitability resilience across the polyester value chain.

Coal Feedstocks Gain Ground as China Expands Chemical Self-Sufficiency

China’s coal chemical industry has expanded rapidly in recent years as domestic technology matures and companies seek alternatives to oil-based feedstocks amid geopolitical uncertainty affecting crude supply.

The largest existing coal-to-ethylene glycol project in China is the 1.8 million-ton annual facility developed by SHCCIG Yulin Chemical, which began construction in 2019 and started operations in 2024. Among petroleum-based ethylene glycol facilities, the largest single-unit lines are the two 1.2 million-ton production lines at Zhejiang Petroleum & Chemical’s Zhoushan base.

Hengyi Petrochemical currently relies heavily on market purchases for ethylene glycol supplies. Based on the company’s existing polyester capacity, annual demand for the chemical is about 3.1 million tons, while combined demand, including Zhejiang Hengyi Group, totals around 4 million tons a year, according to the company.

Recycled Polyester Project Supports Low-Carbon Push

In a separate announcement released the same day, Hengyi Petrochemical said it also plans to invest CNY1 billion (USD146.8 million) to build a recycled polyester intermediate materials plant in Jingzhou, Hubei province. The project will use recycled textile waste to produce 300,000 tons of intermediate products annually which will be used to produce high-performance recycled polyester and downstream specialty fiber materials. Construction is expected to take about 18 months.

The company said the project supports China’s carbon neutrality and carbon peak goals as well as policies promoting textile recycling. It is also expected to reduce the company’s dependence on crude oil resources to some extent and contribute to the textile industry’s low-carbon transition and circular development.

The announcements failed to lift Hengyi Petrochemical’s stock price. Shares of the Shenzhen-listed company [SHE: 000703] closed down 0.9 percent at CNY14.71 (USD2.20) today, while the Shenzhen Component Index fell 0.2 percent.

Editor: Emmi Laine