360,000 Tons/Year New Unit Commissioned! The Logic Behind Wanhua Chemical’s “Expansion in the South and Suspension in the North”

On August 18, Wanhua Chemical announced that the company’s Fujian Industrial Park will be newly constructed.The second phase of the TDI plant (360,000 tons/year) has recently been completed and put into operation.The company’s Yantai Industrial Park TDI unit (300,000 tons/year) and related supporting facilities will begin phased shutdowns for maintenance on August 19, 2025, with the maintenance expected to last approximately 40 days.

TDI (Toluene Diisocyanate) is a core raw material in the polyurethane industry chain, widely used in automotive seats, furniture foam, and other fields. Over the past decade, the global TDI market has long been dominated by three giants: BASF, Covestro, and Wanhua Chemical. The commissioning of Wanhua’s Fujian plant will further consolidate Wanhua Chemical’s leading position in the global market.

Why Fujian and not Yantai?

Wanhua Chemical has chosen to establish new TDI production capacity in Fujian rather than continuing to expand its existing Yantai base. From a market perspective, the choice of Fujian as a location is by no means coincidental. South China is a significant hub for downstream polyurethane industries such as furniture manufacturing, footwear materials, and automotive interiors. As a key raw material, the transportation cost of TDI directly affects the competitiveness of the end products.Wanhua will establish a new production capacity of 360,000 tons per year in Fujian, which will enable more efficient coverage of downstream markets in Guangdong, Fujian, and other areas, reduce cross-regional logistics costs, and enhance supply chain responsiveness.

On the other hand, a decentralized layout is also a key measure for risk mitigation. In 2019, the Yantai Industrial Park experienced a brief production halt due to environmental issues, which had a certain impact on Wanhua’s TDI supply. The addition of new production capacity in Fujian this time not only balances the operational risks of relying on a single site, but also enhances supply stability nationwide. This aligns with the chemical industry’s trend toward “multi-site deployment and flexible production.”

At a deeper level, this choice may also imply considerations of policy and regional economics. In recent years, Fujian has been continuously increasing its investment in the petrochemical industry, with the Zhangzhou Gulei Petrochemical Base having become a national-level petrochemical industry cluster. By investing in new capacity here, Wanhua can not only benefit from local industrial policy support but also better integrate into the petrochemical industry chain ecosystem along the southeast coast.

Wanhua’s “southward expansion” strategy is not only an inevitable choice driven by the market, but also a long-term plan for the company to optimize its supply chain and reduce systemic risks. In the future, as the Fujian base reaches full production, Wanhua’s leading position in the domestic TDI market is likely to be further strengthened.

Capacity adjustment strategy of "increasing in the south and stopping in the north"

Currently, the TDI market is facing continued downward pressure on prices, with overall industry profit margins significantly squeezed. In this market environment, Wanhua Chemical’s capacity adjustment strategy of "increasing in the south and suspending in the north" is particularly meaningful. On one hand, the initial operation of the new plant in Fujian typically requires a ramp-up period. By simultaneously conducting maintenance at the Yantai facility, the company can effectively buffer the sudden increase in market supply, thereby avoiding further pressure on already weak prices. On the other hand, the 40-day maintenance period will conclude just in time for the traditional peak demand season of "Golden September and Silver October." At that point, the seasonal recovery in market demand is expected to drive a price rebound.

This operation method of "trading time for space" can effectively bridge the time window between the commissioning of new production capacity and the maintenance of old units, ensuring the smooth release of new capacity while maintaining the relative stability of the market price system.

Strategic Layout Ideas of Wanhua Chemical

Wanhua Chemical's actions in the TDI field highlight its deep integration of the industry chain, independent breakthroughs in core technologies, and forward-looking planning in market layout.

In terms of deepening the industrial chain, Wanhua has simultaneously built upstream raw material units such as nitric acid and nitrobenzene at its Fujian base, significantly increasing the self-sufficiency rate of raw materials for TDI production and enhancing its ability to withstand risks during raw material price fluctuations. In terms of technological innovation, Wanhua’s independently developed TDI vapor-phase phosgenation technology has reduced its production costs by about 15% compared to the industry average, demonstrating stronger profitability resilience during industry downturns.

At the same time, Wanhua's Fujian base, adjacent to the Southeast coastal region, not only serves the domestic market but also lays the groundwork for expanding into the Southeast Asian market. With the domestic demand growth for TDI slowing down, it has proactively positioned its production capacity and location for the export market. The "dual circulation" strategy of both domestic and international markets is expected to help Wanhua better withstand the impact of cyclical fluctuations.