12.5 billion! China Lianhong Gerun 240000 Ton Polyether Plant was put into trial production. How can we break through if the production capacity is too high?

On November 6, 2025, the 240000-ton/year polyether polyol (PPG) plant of the Lianhong Grun integration project was successfully put into trial production, opening up the whole process at one time and producing qualified products. This incident occurred at a special time when China's polyether polyol industry overcapacity intensified and raw material prices continued to be low. How the new capacity can find a foothold in the fierce competition deserves the attention of global chemical practitioners.

China polyether market: capacity expansion and profit narrowing coexist

china's polyether polyol market is showing obvious structural contradictions. In 2023, the industry's production capacity has exceeded 7.7 million tons, but weak demand growth has led to pressure on the industry leader Wanhua Chemical's first quarter of 2025: operating income of 43.068 billion yuan (down 6.70 percent year-on-year) and net profit of 3.082 billion yuan (down 25.87 percent year-on-year).

More noteworthy is the capacity expansion of upstream raw material propylene oxide: in 2024, China's total propylene oxide production capacity will reach 7.82 million tons (up 27.78 percent year-on-year) and 5.27 million tons (up 22.27 percent year-on-year). Production capacity will continue to be released in 2025, including PetroChina Guangxi Petrochemical 270000 tons/year, Huayi Qinzhou Chemical 300000 tons/year and other projects, the total production capacity is expected to exceed 10 million tons/year. Production from January to May 2025 has reached 2.1593 million tons, up 6.52 per cent year-on-year.

Adequate supply of raw materials pushes down procurement costs, but also compresses the profit margins of the entire industrial chain, and the industry enters the "meager profit era".

Integrated layout: the core competitiveness of Lianhong Grun

lianhong Gerun Integration Project has a total investment of 12.5 billion yuan and covers an area of more than 1600 mu, including 1.3 million tons/year DMTO, 200000 tons/year EVA, 300000 tons/year PO (propylene oxide), 50000 tons/year PPC and 240000 tons/year PPG devices. Its 240000-ton PPG plant adopts a continuous process independently developed by China, uses double metal cyanide (DMC) as catalyst, and uses self-produced propylene oxide and ethylene oxide as raw materials to produce three series of soft foam 330, CASE220 and CASE240 products.

Significant cost advantage according to Wanhua Chemical data, enterprises with a self-sufficiency rate of over 80% of propylene oxide are 12% lower than those with purchased raw materials. Based on the current market price of propylene oxide of 7,000-7,500 yuan/ton, Lianhong Grun can save about 1000 yuan per ton of polyether, and the annual cost advantage after the full production capacity of 240000 tons can reach 2-0.3 billion yuan.

Product positioning high-end: CASE series (coatings, adhesives, sealants, elastomers) are oriented to high value-added fields such as automobiles and construction, which are relatively undersupplied market segments in China. Hongbaoli achieved revenue of 0.654 billion billion yuan (up 9.48 year-on-year) in the first quarter of 2025 through product upgrading, proving the feasibility of high-end transformation.

Market Implications for Global Purchasers

price game window period: 240000 tons of new capacity will exacerbate the oversupply and expand the bargaining space for buyers in the short term. It is recommended to adopt a "pick-as-you-go" strategy to avoid locking inventory at high levels.

Supply Chain Restructuring Opportunities: Integrated companies have more advantages in cost control and supply stability. Overseas purchasers can evaluate the establishment of long-term cooperative relations with Chinese integrated enterprises such as Lianhong Grun, but they need to pay attention to the progress of capacity climbing and product quality consistency.

Domestic substitution trend: China's high-end CASE series polyether production capacity increase, may drive down the price of such products, for the global downstream automotive, construction industry to bring cost optimization space. Overseas buyers should closely follow the export price and quality certification progress of China's high-end polyether.