Wanhua chemical and henan pingmei shenma polycarbonate materials establish new company to boost high-end pc materials

In late May 2026, Huashen New Materials (Henan) Co., Ltd. was officially registered and established, with a registered capital of RMB 360 million and Li Peng as its legal representative. Its shareholding structure is as follows: Wanhua Chemical Group Co., Ltd. holds 55%, and Henan Pingmei Shenma Polycarbonate Materials Co., Ltd. holds 45%. Its business scope includes the manufacture of basic chemical raw materials, the manufacture and sale of synthetic materials, as well as the operation of Category I non-pharmaceutical precursor chemicals and Category II monitored chemicals.

The establishment of the company was not an isolated event—since the environmental impact assessment announcement in March 2026 for Pingmei Shenma’s Phase II project of 200,000 tons of polycarbonate (PC) and the supporting 150,000-ton phosgene project, as well as the confirmation that the PC process technology source is Wanhua Group, the strategic cooperation between the two parties has already entered a substantive stage of advancement. Huashen New Materials is precisely the capital-level vehicle through which this technological cooperation is being implemented.

(I) Wanhua Chemical: A Global Chemical Giant Enters an Accelerated Phase in New Materials Deployment

2025 Operating Fundamentals: Wanhua Chemical’s full-year 2025 revenue reached RMB 203.235 billion, up 11.62% year on year, surpassing the RMB 200 billion mark for the first time. However, net profit attributable to shareholders of the parent company was RMB 12.527 billion, down 3.88% year on year. The strong revenue growth alongside a slight decline in profit reflects that the company still faces cost pressures behind the growth in its core business performance.

2026 Investment Themes: In 2026, Wanhua Chemical is expected to make external equity investments totaling RMB 2.22 billion. Its investment focus will primarily center on three main themes: the deployment of battery materials, the development of new materials businesses, and the implementation of its internationalization strategy. At the same time, the company will leverage the advantages of its integrated industrial park value chain to deepen upstream and downstream collaboration. Notably, in 2025, Wanhua Chemical had already made external investments in 12 companies, 6 of which were focused on materials-related businesses, indicating that its materials strategy has been upgraded from a “supplementary” role to a “core” priority.

Huashen New Materials is an important part of Wanhua Chemical’s investment in its 2026 new materials business. Earlier, in mid-May, Wanhua Chemical had already established a new materials technology company in Hubei together with Shandong Luyin Investment, with a registered capital of RMB 100 million, to invest in a high-performance metal powder materials project with a planned total investment of RMB 450 million. Wanhua Chemical’s “multi-location deployment and multi-point blooming” pattern in the new materials track is taking shape.

(Pending) Pingmei Shenma Polycarbonate Materials: A Domestic Substitute Force, from “Salt” to “High-End Materials”

Company Background: Henan Pingmei Shenma Polycarbonate Materials Co., Ltd. was established in February 2018 and is affiliated with China Pingmei Shenma Group. The plant is located in the Yexian Advanced Manufacturing Development Zone and covers an area of approximately 1,000 mu. The project is planned to include a 400,000-ton/year polycarbonate (PC) facility and a supporting 370,000-ton/year bisphenol A (BPA) facility. The first phase of the company has already completed a 100,000-ton/year PC unit and a supporting 130,000-ton/year bisphenol A unit, making it one of the important polycarbonate producers in China.

Core Competitiveness: Domestic substitution of high-end PC products: The company has achieved a technological breakthrough in the field of optical film-grade PC materials, becoming one of only two companies in China to realize domestic substitution for this material. Optical film-grade PC features high transparency, excellent impact resistance, and lightweight properties, and is widely used in high-end fields with extremely stringent cleanliness requirements, such as electronic display devices, optical instruments, and new energy battery systems. In addition, 30% to 40% of the PC materials used by domestic luggage manufacturers are supplied by the company, underscoring its solid market position.

Operating Performance: Pingmei Shenma Polycarbonate Materials Company achieved strong production and sales in March and April 2026, realizing continuous profitability. In January 2026, the production volume of PC particles reached 8,600 tons, setting a record high for the same period, with both volume and price rising. The company secured a cost advantage in production through precise raw material procurement (purchasing bisphenol A at 8,000 yuan/ton in January 2026, while the market price later peaked at 12,000 yuan/ton). This operational capability demonstrates the company's strong competitiveness in cost control and market forecasting.

1. The project cooperation has already commenced.

In March 2026, the Pingdingshan Municipal Ecology and Environment Bureau released the acceptance notice for the environmental impact report of Pingmei Shenma Polycarbonate Materials Co., Ltd.’s Phase II 200,000 t/a polycarbonate project and supporting 150,000 t/a phosgene project. With an investment of approximately RMB 1.8 billion, the project will be located on reserved land within the existing plant area and will include a new 200,000 t/a PC production unit and a supporting 150,000 t/a phosgene synthesis unit. The most critical information about the project is that it will be implemented in cooperation with Wanhua Chemical Group, with the PC process technology sourced from Wanhua Group. The company’s Phase I project, comprising 100,000 t/a PC and a supporting 130,000 t/a bisphenol A unit, has already been completed, and comprehensive public utilities and auxiliary production facilities were built during the construction of Phase I.

A grander plan is that Pingmei Shenma is fully advancing the preliminary work for the 400,000 tons/year PC production project, which is expected to be fully launched in June 2026. The establishment of Huashen New Materials coincides with the critical time window for this phase two and future expansion plans.

(II) Value Logic of the Industrial Chain: From “300 Yuan” to “30,000 Yuan”

Pingmei Shenma's layout in Yexian did not come out of thin air. Relying on Yexian's advantage as the "Capital of Rock Salt in China" with abundant reserves, the company is building a complete golden industrial chain from "rock salt—chlor-alkali—phosgene—polycarbonate (PC)." A company official once did the math: one ton of raw salt costs only 300 yuan, processed into caustic soda worth 3,000 yuan, and when transformed into polycarbonate pellets, its value soars to nearly 30,000 yuan, achieving an astonishing increase of over one hundred times.

This value chain, from basic resources to high-end materials, is precisely the core logic behind Huashen New Materials’ future operations.

(III) Compliance Barriers: Why Do New Companies Need a “Precursor Chemicals Business” Qualification?

华神新材料的经营范围中包含了“第一类非药品类易制毒化学品经营”和“第二类监控化学品经营”两项资质。这两项资质的必要性在于：PC生产配套的光气项目涉及光气及光气化工艺，而光气属于典型的重点监管危险化工工艺和剧毒化学品。

The new company must obtain these two special operating licenses in order to legally undertake the procurement of raw materials and the sales of products required for the PC project.

It is worth noting that the mandatory national standard "Safety Specifications for the Production of Phosgene and Phosgene-derived Products" (GB 19041—2024) will be released in August 2024 and will officially take effect on March 1, 2025. It imposes higher safety requirements on the planning layout, design, production operation, and emergency response of phosgene and phosgene-derived product production facilities. The establishment of Huashen New Materials less than three months after the implementation of the new regulations indicates that Wanhua Chemical has fully considered compliance standards in its technology output, and it also means that the new company will adhere to stricter safety management norms from its inception.

(I) The turning point of the PC industry’s business cycle has arrived.

Based on research reports from multiple brokerage firms, the Chinese PC industry is currently at a critical window of a supply-demand inflection point.

• On the demand side, downstream industries such as new energy vehicles, electronic displays, and smart homes are driving PC demand to maintain relatively high growth, coupled with export growth and import substitution amid rising self-sufficiency rates.

• Supply side: It is expected that the industry's new capacity will be relatively limited from 2025 to 2027, with basically no new capacity being added in 2026.

• Operating rate recovery: The industry operating rate has rebounded from a low level to a relatively high level, and is expected to reach 87%, 94%, and 95% in 2025, 2026, and 2027, respectively, indicating a continued improvement in the utilization of existing capacity.

During the window of industry recovery, Wanhua Chemical can enter the Henan PC project through technology transfer rather than heavy capital investment, thereby maximizing technological returns at the lowest possible cost.

(II) Wanhua Chemical’s “Technology Monetization” Logic

Wanhua Chemical chose a light-asset expansion path of exchanging technology for equity: the Phase II PC project of Pingmei Shenma explicitly adopts “a cooperation model with Wanhua Chemical Group, with the PC process technology sourced from Wanhua Group.” This means that Wanhua Chemical may contribute capital by way of technology licensing or technical services in exchange for equity, rather than investing the full RMB 360 million in cash.

For Wanhua Chemical, this is a highly efficient path for technology monetization.

• PC technology is mature, the marginal cost of replication is low, and it can be monetized across multiple PC projects nationwide through technology licensing, delivering an extremely high ROI.

• Cooperating with leading state-owned enterprises in various regions can leverage their location advantages and policy resources to accelerate product penetration.

• It not only avoided the risks of heavy-asset investment during the PC industry’s excess-capacity period, but also positioned itself to capitalize on a key upcycle in the industry.

This model of "not building factories, only exporting technology" is becoming the standard approach for Wanhua Chemical's expansion in the new materials business.

(3) From “Selling Technology” to “Selling Standards”: Wanhua Chemical’s Ecosystem Positioning

The deeper strategic intent lies in the power to set standards. The new national safety production standard for phosgene and phosgenation products, implemented from March 2025, will subject the PC industry to stricter technical thresholds and compliance costs. As a leading domestic player in PC process technology, Wanhua Chemical is gradually defining the industry’s technological pathway and product standards by tying up multiple downstream partners, such as Pingmei Shenma and Luyin Investment. As more and more projects adopt Wanhua’s technical solutions, Wanhua is no longer merely a supplier, but a de facto industry standard-setter.

(I) Fill Technical Gaps and Acquire Mature Processes

Although Pingmei Shenma had already established a presence in PC production capacity, it still relied on externally introduced core process technologies. Through Huashen New Materials, Pingmei Shenma obtained Wanhua Chemical’s mature PC process technology system, resolving the technical bottlenecks for its Phase II 200,000-ton/year PC project and even its long-term 400,000-ton/year PC project. This means that Pingmei Shenma can skip the lengthy independent R&D cycle and move directly into large-scale mass production.

(2) Leveraging the Wanhua brand to open channels into the premium market

Pingmei Shenma has already made breakthroughs in high-end products such as optical film-grade PC, but there is still a gap in brand influence compared with Wanhua Chemical. By establishing a joint venture with Wanhua Chemical, the company can leverage Wanhua’s long-standing brand premium and customer channels in the field of chemical new materials to accelerate market penetration of its high-end PC products, especially in high-end applications such as new energy vehicles and electronic optics, where supplier qualification reviews are extremely stringent.

(III) Leveraging the “Policy Dividend” from Henan Province’s Industrial Transformation

Pingmei Shenma Group has been entrusted by the Henan Provincial Party Committee and the provincial government with the missions of building the province’s primary platform for safeguarding energy security, strengthening its role as the chain leader of a world-class nylon new materials industry chain, and serving as a leader in the development of coal-based chemicals and silicon-carbon new materials industries. The integrated industrial chain layout in Yexian County of “rock salt–chlor-alkali–phosgene–PC” is a landmark project exemplifying Pingdingshan’s transformation from a traditional resource-based city into a hub for the new materials industry.

As the joint venture vehicle for this transformation, Huashen New Materials can naturally benefit from multiple dividends such as local government industrial policy support, land allocation, and tax incentives.

(I) Safety and Compliance Risks in the Operation of Sensitive Chemicals

The new company's business scope involves the operation of Category I non-pharmaceutical precursor chemicals and Category II monitored chemicals, which places extremely high demands on the enterprise's safety management and compliance capabilities.

The "Safety Specifications for Phosgene and Phosgene Derivatives Production" (GB 19041—2024), released in 2024, will officially be implemented in March 2025. It imposes stricter requirements on the planning layout, safety instrument systems, gas detection systems, and other aspects of phosgene and phosgene derivatives production facilities. Huashen New Materials must ensure full compliance with this standard from the outset; otherwise, it risks production suspension for rectification or even more severe administrative penalties.

Uncertainties in the supply and demand dynamics of the PC industry

Despite the current assessments from multiple institutions that the turning point in supply and demand for the PC industry has arrived, competition within the industry continues to intensify. After the fourth quarter of 2027, there may be an additional 1.58 million tons per year of new production capacity coming online, which could disrupt the balance of supply and demand once again. If new companies' second-phase projects are put into production during a period of concentrated capacity release in the industry, they will face the risk of profit margins being compressed.

(3) The risk of tighter environmental protection policies for the phosgene process.

With increasingly stringent environmental policies, the non-phosgene process has gradually become the mainstream choice for new projects due to its advantages of fewer by-products and higher safety. Although most global PC capacity still uses the phosgene process, it is highly likely that domestic policies will impose tighter restrictions on phosgene-based technology. If regulators further tighten environmental standards for phosgene-based PC production in the future, Huashen New Materials’ process route may face pressure to upgrade, potentially resulting in additional capital expenditures.

(4) The Sustainability of the Technical Cooperation Model

Wanhua Chemical’s technology-for-equity cooperation model exhibits a high degree of synergy in the Phase II project. However, the boundaries of the cooperation remain unclear—will it be limited to the Phase II PC project in the future? The specific terms of the technology licensing arrangement, including whether it is exclusive, whether Pingmei Shenma will be allowed to independently expand capacity in the future, and whether continued support for technology upgrades will be provided, have not been publicly disclosed. If the two parties are unable to reach agreement on the ownership of intellectual property rights for new products or on the mechanism for benefit distribution, the basis of their cooperation may potentially weaken.

A comparison reveals that Wanhua Chemical is adopting a diversified strategy of "regional layout and multi-party cooperation" in the materials sector—establishing PC material production in Henan and metal powder material production in Hubei. This multi-location strategy effectively disperses the risks associated with relying on a single project or region, but it also leads to the dispersion of resources and increased management complexity.

The establishment of Huashen New Materials marks an important step in Wanhua Chemical’s transformation from a manufacturer into a technology output platform, and also serves as a key vehicle for Pingmei Shenma’s upgrade from traditional energy and chemical industries to the new materials sector.

Wanhua Chemical, through Huashen New Materials, can:

• Maximize technological gains during industry boom cycles and amplify technological value through an asset-light model.

• Co-build an ecosystem with leading local state-owned enterprises to capture the domestic substitution market.

• Gradually establish industry standard influence in the field of new materials, upgrading from "selling products" to "selling standards."

Pingmei Shenma can leverage Wanhua’s technical capabilities and brand endorsement to:

• Break through bottlenecks in core processes and accelerate the rollout of new PC production capacity.

• Connect with the policy dividends of industrial transformation in Henan Province and enjoy policy support.

• Accelerate the strategic transformation from “coal chemical engineering” to “new materials.”

Five key milestones worth tracking continuously:

1. Whether the new company has obtained business licenses for precursor chemicals and monitored chemicals (including the time and scope);

2. In what form does Wanhua Chemical inject PC technology (technology licensing fee or technology contributed as equity)?

3. The coordinated progress of the new company and the Phase II 200,000-ton/year PC project of Pingmei Shenma.

4. Boundary delineation between the 400,000-ton/year PC project of Pingmei Shenma (long-term plan) and Huashen New Materials.

5. Will there be other joint venture companies with the "Wanhua Technology + local resources" model in the future?

The establishment of Huashen New Materials is not only an inevitable extension of Wanhua Chemical’s continued efforts since 2018 to strengthen its new materials business layout, but also a microcosmic example of China’s chemical industry transitioning from “large but not strong” to “strengthening and supplementing industrial chains.” How far this cooperation can go will depend on the continued game and balance between the two parties in the allocation of technological interests, safety management compliance, and the evolving market competition landscape.

Note: This article is based on analysis of publicly available information. Data sources include Qichacha, Tianyancha, announcements from listed companies, industry research institution reports, and public news reports. Some cooperation details (such as technical licensing terms and specifics of joint venture agreements) have not yet been publicly disclosed. This article presents logical deductions and reasonable analysis based on the available information.