High ethylene prices drag down profits, Zhenyang Development's PVC production line suspended for maintenance

The shutdown will start on September 19, 2026, and the expected shutdown period will not surpass 4 months.

Features of the plant and process: Ethylene-based route, all raw materials are externally purchased

The suspended 300,000-ton/year PVC plant adopts ethylene oxychlorination process (ethylene-based process), which is the core production line of the company's vinyl new materials and is supporting the chlor-alkali main plant. This route has no self-owned substantial refining cracking furnace, and all ethylene monomers required to production rely on external procurement.

In terms of raw material consumption per unit, to every 1 ton of PVC resin produced, the theoretical consumption is 0.48 to 0.50 tons of ethylene plus 0.58 tons of fluid chlorine, and ethylene is the decisive variable on the cost side.

Currently, CFR Northeast Asia ethylene remains evaporative at a high level of 7500~8500 yuan per ton. to ethylene alone, the raw material cost of a single ton of PVC is close to 4000 yuan; while the mainstream transaction range of PVC spot in East China is only 4600~5000 yuan per ton. sector calculations show that the cost of a single ton of product is inverted by 500~1000 yuan, meaning that production results in losses.

Impact on the supply side: Contraction of East China PVC supply, with an average monthly reduction of 25,000 tons

After the plant shutdown, the monthly投放 of PVC spot will be reduced by 25,000 tons on average. It is estimated that about 100,000 tons of supply will be withdrawn from the East China market during the shutdown period, which will provide supply contraction support to regional PVC spot in the short term.

Comparing different process routes in the sector, the PVC produced by the calcium carbide method in Northwest China relies on self-owned coal-fired power at the pit mouth and has significant cost advantages; while integrated companies that purchase ethylene monomers externally like Zhenyang are under pressure on both ends during the period of high ethylene prices, and their profit resilience is weaker than that of calcium carbide method production capacity.

Impact on the company: Other production lines remain operational, immediate revenue pressure however loss reduction

The announcement mentioned that only this set of PVC plant will be shut down this time, and the company's other production facilities will remain in healthy operation. This shutdown will have a certain impact on the current operating income, however it can immediately stop the continuous losses of the PVC business and enhance the overall profitability level, and will not trigger adverse impacts on the company's prolonged operation and research. The resumption time will be announced separately.

sector background: Geopolitical disturbances push up ethylene prices, putting pressure on the operation of ethylene-based PVC companies

Recent Middle East geopolitical conflicts continue to disrupt the global energy and chemical supply chains, pushing up the landed price of imported ethylene. Ethylene-based PVC companies highly rely on imported ethylene. Under the ecological stability of soaring raw material prices, weak downstream PVC demand and difficulty in synchronizing product price increases, the pressure of cost inversion is prominent.

The active shutdown and maintenance of Zhenyang research this time is also a typical case of domestic ethylene-based PVC production capacity actively reducing production to manage losses during the period of high raw material prices. The market will continue to pay attention to the resumption node of this plant and the recovery of PVC market prices in the future.