Hengyi Petrochemical, a major Chinese non-state manufacturer of oil products, reported a nearly 40-fold jump in profit for the first quarter, citing the sharp rise in prices triggered by the Iran war and effective closure of the Strait of Hormuz.
In a disclosure to the Shenzhen Stock Exchange on April 14, the Hangzhou-headquartered company said its revenue for the first three months of the year climbed by 10.2% on the year to RMB 29.94 billion (USD 4.4 billion), while its net profit reached RMB 1.99 billion (USD 291.5 million), soaring by 3,773%.
While its disclosure for the quarterly results was light on detail, the company’s annual report explained that higher oil prices since March were responsible for the dramatic turn in its fortunes during the first quarter.
The company noted that for one of its main products, purified terephthalic acid (PTA), a shortage of raw materials has continued and operation rates of global PTA facilities “fell significantly” since March “due to geopolitical reasons.” As a leading player in the market, Hengyi expects to benefit from the new reality where supply continues to drop.
The company reported a similar effect in the market for polyethylene terephthalate, or PET, which is manufactured from PTA and used to make retail products ranging from clothing to plastic bottles and packaging materials. A global supply shortage of PET since March has pushed up prices, improving the profitability of Hengyi’s PTA and PET businesses.
The sudden elevation of oil and other petrochemical products had also increased the value of Hengyi’s inventory by over 40% year-on-year to RMB 18.7 billion (USD 2.7 billion) as of the end of March, according to the quarterly results.
Until the war broke out, China’s petrochemical sector was a typical story of overcapacity and overproduction, keeping margins razor thin. Hengyi was not immune.
Its annual revenue for the full year of 2025 came to RMB 113.52 billion (USD 16.6 billion), 9.5% lower than the year before. Its net profit did rise 10.4% to RMB 258.33 million (USD 37.8 million), but this was mainly thanks to an increase in various government subsidies.
The company’s annual revenue has been on a continuous decline since peaking at RMB 152.05 billion (USD 22.3 billion) in 2022. In the years since, Hengyi avoided red ink, but its accumulated net profit over the last three years until 2025 is less than half of what it recorded in the first quarter of this year alone.
One edge Hengyi enjoys over its peers is a petrochemical complex it owns in Brunei, with an annual crude oil refining capacity of eight million metric tons. The company mainly feeds its domestic downstream facilities from its own Southeast Asian production.
On top of its sourcing advantage, the oil price rise has lifted the diesel crack spread—the difference between the cost of crude and products made from it—above USD 150 per ton in the Singapore market, from USD 15–25 last year. The company expects various spreads to remain at high levels throughout the year. “This has become a core factor” expected to enhance financial performance “currently and in the future,” it said.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.
Note: RMB figures are converted to USD at rates of RMB 6.83 = USD 1 based on estimates as of April 20, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.