Why is Rongsheng Petrochemical the Most "Attractive"?

(Source: Polyolefins People)

The “Great Chemical Cycle” is grandly beginning. As one of the most logically clear fields, large-scale refining and chemical integration has naturally become a highly sought-after market segment, and Rongsheng Petrochemical, with its outstanding fundamentals, may also become the most attractive target within this sector.

As the best representative of the chemical industry’s prosperity indicator, the China Chemical Product Price Index (CCPI) has been declining since June 2022 and has continued for three years. After a prolonged bottoming process in 2025, the CCPI rebounded at the end of the year, sparking external speculation about a new bull market in the chemical industry.

Looking at various chemical sub-sectors today, large-scale refining and chemical integration is recognized as a combination of actual price increases and supply-demand logic. Rongsheng Petrochemical, as a leading private sector player in large-scale refining and chemical integration, not only benefits from the industry’s “favorable period” but also leverages its full industry chain layout and global expansion potential, making it one of the most valued companies in this “big chemical cycle.”

Refining and Chemical Recovery,

Rongsheng Petrochemical Poised for Growth

In this round of the “Great Chemical Cycle,” large-scale refining and chemical integration is undoubtedly the most explosive segment.

In fact, as early as Q4 2025, some petrochemical products had already begun to rise. According to data from the Business Society, by the end of that quarter, the prices of refinery by-products such as petroleum coke and sulfur had risen to 2,598.25 yuan/ton and 3,661 yuan/ton, respectively, with year-on-year increases of 60.88% and 116.5%. As core products in the aromatics chain, PX and PTA prices reached 7,500 yuan/ton and 5,079.09 yuan/ton, with quarterly increases of 10.29% and 10.54%.

Entering 2026, the upward trend of petrochemical products further expanded, especially amid recent geopolitical tensions. Since the conflict began on February 28, sulfur prices at major ports have increased by over 12%. Meanwhile, futures prices for ethylene glycol, polyethylene, and polypropylene on the Dalian Commodity Exchange surged nearly 15%, 13%, and 14%, respectively.

Currently, the Strait of Hormuz accounts for about 44% to 50% of global sulfur shipping. Nearly all of China’s imported ethylene glycol (66%) comes from the Middle East and depends on the Strait of Hormuz for transit. Additionally, 42% of polyethylene and over 30% of polypropylene imports also originate from the Middle East. If local production and navigation issues persist, prices of related products are expected to remain strong.

For Rongsheng Petrochemical, the company has a sulfur capacity of 1.21 million tons, ethylene glycol capacity of 2.4 million tons, and full-density polyethylene, high-density polyethylene, and high-pressure polyethylene capacities of 900, 650, and 800 thousand tons, respectively. With short-term price increases, the company’s first-quarter profits are expected to further grow.

It is worth noting that, from a medium- to long-term perspective, the prosperity logic of large-scale refining and chemical integration remains smooth.

On the supply side, the government has clearly set a red line of 1 billion tons of refining capacity, and the expansion cycle has basically ended. Additionally, environmental controls are tightening, with energy consumption dual controls shifting from the “14th Five-Year Plan” to the “15th Five-Year Plan” for carbon emission dual controls. Project approvals continue to tighten, and industry growth is becoming more controlled.

According to a research report from Tianfeng Securities, the capacity addition growth rate for major petrochemical products in 2026 will mostly be below 5%, with PX and pure benzene capacity additions slowing to 4.3% and 4.6%. By 2028, PTA capacity growth will “return to zero,” and ethylene, styrene, and polyester capacity growth rates will also decrease to 3.5% or less.

A horizontal comparison shows that the current supply situation of large-scale refining and chemical integration is very similar to the electrolytic aluminum industry, which has a capacity cap set at 45 million tons per year. In recent years, due to limited capacity space, the utilization rate of electrolytic aluminum has been high, and product prices have shown an upward trend.

On the cost side, although geopolitical conflicts, rate cuts, and global economic recovery support higher crude oil prices, the ceiling price of crude oil is restrained by expectations of increased production. Overall, prices are rising moderately, ensuring raw material price stability for refining companies and leaving room for product price increases. RMB appreciation also reduces domestic refining and chemical companies’ import oil costs, further boosting profitability.

On the demand side, although domestic refined oil demand has peaked, the proportion of chemical-use oils is increasing, indicating clear growth potential for the refining industry in terms of demand.

In fact, driven by the upward cycle of large-scale refining and chemical integration, the secondary market has already responded, with real capital favoring industry leader Rongsheng Petrochemical.

As of the close on March 5, Rongsheng Petrochemical’s stock price has increased by about 30% year-to-date, and has doubled from its low point in 2025, with a market value exceeding 150 billion yuan. Calculations show that in Q4 2025, Rongsheng Petrochemical ranked among the top 50 heavy holdings in the chemical industry funds, reflecting strong institutional recognition of its core value.

Even more promising is the company’s significant earnings leverage potential. In 2021, Rongsheng Petrochemical achieved a profit of 12.8 billion yuan, with its rights and interests refining capacity at only 10 million tons/year at that time. Now, with a full-load capacity of 40 million tons/year, four times higher, and chemical product capacity reaching 60 million tons/year, the company’s scale has grown substantially.

Tianfeng Securities forecasts that by 2027-2028, with the completion of Rongsheng Petrochemical’s three major new material capacities, its rights and interests capacity will reach three times that of 2021, with long-term profits potentially around 30 billion yuan. Considering the scarcity of refining, ethylene, and aromatics indicators under the dual-carbon goal, a PE valuation of 13-15 times is reasonable, with a long-term target market value of 400 billion yuan.

Full Industry Chain Advantage as the “Foundation”

The big chemical cycle is the “tailwind” for Rongsheng Petrochemical to expand its imagination space, and its full industry chain layout is the company’s confidence in seizing opportunities.

Looking back over nearly 30 years of development, Rongsheng Petrochemical started from the “Rongsheng Textile Era,” and through foresight and long-term planning, built a complete chain from crude oil to aromatics, olefins, purified terephthalic acid, ethylene glycol, polyester, spinning, and compounding. Its products span new energy, new materials, organic chemicals, synthetic fibers, resins, rubbers, and oil products, evolving from a single filament to a platform-based new material enterprise.

As a core asset, Zhejiang Petrochemical has formed a processing capacity of 40 million tons/year of refining, 10.4 million tons/year of PX, and 4.2 million tons/year of ethylene. It is developing aromatics, ethylene, downstream deep processing projects, and new chemical materials with high added value, becoming a key platform for integrated industry chain development.

Currently, Zhejiang Petrochemical has achieved the world’s leading project integration rate, far above the national average, with a scale and level of integration that are among the best globally. It can process 80%-90% of the world’s crude oil, demonstrating strong adaptability to oil price fluctuations.

Besides Zhejiang Petrochemical, Zhongjin Petrochemical and Rongsheng New Materials (Zhoushan) are also indispensable. Zhongjin Petrochemical has a 2 million ton/year aromatics unit, one of the largest in the country, supporting the company’s aromatics industry chain. Rongsheng New Materials (Zhoushan), relying on Zhejiang Petrochemical and Zhongjin Petrochemical, focuses on fine chemicals and new chemical materials, responsible for developing downstream products.

On top of the full industry chain, Rongsheng Petrochemical’s products also hold significant market share advantages, creating many industry “firsts.”

Currently, the company is the only private refining enterprise in China with export qualifications for refined oil, with Zhejiang Petrochemical holding an export quota of 1.56 million tons for 2026. During the high-profit window of refined oil exports, this further enhances profitability.

It also boasts the world’s largest PX and PTA production capacity. By the end of 2025, China’s PX capacity will reach about 44.01 million tons/year, with the company’s 10.4 million tons capacity ranking first nationwide, accounting for about 24%. Its PTA capacity reaches 21.5 million tons.

Additionally, Rongsheng Petrochemical’s butadiene capacity is 700,000 tons/year, ranking first among Chinese refineries. Its pure benzene capacity reaches 3.3 million tons/year, the highest among domestic refineries. Its polyester bottle chip capacity is 5.3 million tons/year, ranking first nationally and second globally. Its PC capacity is 520,000 tons/year, ranking fourth worldwide, and its polyester filament capacity is about 1.6 million tons/year, ranking sixth nationally.

Global Expansion Opens New Horizons

Leading Chinese large-scale refining and chemical companies like Rongsheng Petrochemical are positioned at an excellent point for overseas expansion.

Public data shows that due to rising energy prices in recent years, overseas refining and chemical companies have entered a capacity “retreat” phase. For example, in 2022, LyondellBasell decided to exit refining. According to INEOS, about half of Europe’s ethylene capacity will shut down before 2030.

This overseas decline signals an “eastward” rise for domestic refining and chemical industries. Against this backdrop, Rongsheng Petrochemical is not only strengthening its full industry chain advantages but also increasingly focusing on global opportunities.

In 2023, Saudi Aramco officially became a strategic investor by acquiring a stake in Rongsheng Petrochemical. This makes Rongsheng one of the few companies directly owned by Saudi Aramco in the industry, laying a solid foundation for future cooperation.

As the world’s largest oil and gas producer, Saudi Aramco supplies Rongsheng Petrochemical with 480,000 barrels/day of high-quality crude oil and raw materials for naphtha, mixed xylenes, and straight-run fuels, ensuring stable raw material supply.

Saudi Aramco also provides a 20-year interest-free procurement credit line, which can be increased during the cooperation period, positively impacting Zhejiang Petrochemical’s capital efficiency and profitability. With Saudi Aramco’s overseas sales channels, Rongsheng Petrochemical can further expand its international market and deepen overseas customer relationships.

Moreover, Rongsheng Petrochemical plans to acquire a 50% stake in SASREF, a fully owned Saudi Aramco refinery in Jubail, and participate in its expansion project. Huaxin Securities believes that jointly developing the second phase of SASREF aims to build a “dual circulation” model with four bases in two countries. Relying on the industrial cost advantages of Jubail Industrial City and material recycling across four bases, future profits could be enhanced, and overseas refinery locations could open growth opportunities.

From full industry chain layout to global expansion, Rongsheng Petrochemical’s strategic steps to strengthen core competitiveness are becoming increasingly clear. For investors, if choosing the most “attractive” company in this cycle of “big chemical,” Rongsheng Petrochemical is undoubtedly the answer.

Source: Global Tiger Finance

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