In the past five years, China's ethylene glycol (EG) industry has entered a new round of capacity expansion. By 2025, the total capacity has climbed to 31.542 million tons, intensifying the competition between the two mainstream production processes: syngas-based and ethylene-based. Within this context, the ethylene route, leveraging the advantage of integrated refining and chemical feedstock supply, has demonstrated stronger risk resilience. Conversely, the syngas route, hampered by factors like fluctuating coal prices and high transportation costs, has seen its cost competitiveness continuously weaken. Faced with industry-wide structural adjustments and overcapacity pressures, leading syngas-based EG producers are seeking breakthroughs through avenues such as securing proprietary resources and process retrofitting.
Since 2020, China's EG industry has embarked on a new expansion cycle. Particularly between 2020 and 2023, new capacities were commissioned continuously. Although the pace of capacity growth slowed in 2024, with the gradual start-up of new plants like Sichuan Zhengdakai and Shandong Yulong Petrochemical in 2025, China's total EG capacity reached 31.542 million tons by the end of 2025, achieving a five-year compound annual growth rate of 14.97%.
Behind the rapid capacity increase in the EG industry lies an increasingly fierce competition between the two mainstream process routes: ethylene-based and syngas-based EG. The industry is now at a critical juncture of structural adjustment. The ethylene-based route, benefiting from the feedstock advantages of integrated refining and chemical projects and relying on the overall profitability of these complexes, has withstood the impact of compressed EG profit margins during this expansion cycle. In contrast, the cost competitiveness of syngas-based EG has continued to weaken since the high coal price shock of 2021, forcing producers to seek breakthroughs through resource integration and process optimization. Precise cost control has thus become the core imperative for syngas-based EG producers to defend their market position and pursue growth.
Capacity expansion is reshaping the competitive landscape, intensifying the divergence between process routes. This rapid expansion in the EG industry is primarily driven by two factors. Firstly, the commercialization and scaling of syngas technology; the single-train capacity of newly built syngas-based EG units in recent years has increased from an initial 200,000 tons/year to 600,000 tons/year. Leveraging abundant inland coal resources, the construction of large-scale coal-to-EG projects in inland regions has accelerated noticeably. Secondly, there has been a concentrated commissioning of EG units配套 within coastal integrated refining and chemical complexes. In terms of process structure, the share of syngas (coal)-based EG capacity rose to 39.85% in 2025, while ethylene-based EG accounted for 60.15%. Geographically, East China remains the core EG production region due to advantages like the agglomeration of the downstream polyester industry chain and convenient port logistics. In 2025, East China accounted for 46.79% of the national total EG capacity. EG plants in this region, primarily those integrated with refining complexes like Zhenhai Refining & Chemical, Shenghong Refining & Chemical, and Zhejiang Petrochemical, are typically large-scale, with single-train capacities generally reaching 800,000 to 1 million tons/year, offering significant economies of scale. Compared to syngas-based plants, their proximity to downstream polyester producers provides a distinct locational advantage.
The cost competition between ethylene-based and syngas-based EG highlights the weakening advantage of the coal route. The differing cost structures arising from the different feedstocks of the two mainstream EG processes directly determine their sensitivity to raw material prices. Oil-based EG is an oil-price-sensitive route, primarily reliant on crude oil derivatives like naphtha and ethylene. By being part of an integrated refining complex, producers can achieve self-sufficiency in direct EG feedstocks. Through integrated operations, they can adjust production schedules and optimize product slates to hedge against operational risks from international oil price fluctuations and volatility in downstream chemical product prices.
The cost advantage of syngas-based EG, however, is highly dependent on coal price trends. Its overall cost is significantly impacted by coal price volatility. At the current Ordos Q5500 thermal coal price of 525 yuan/ton, the cost of coal-based EG is approximately 3,675 yuan/ton. Compared to the current cost of oil-based EG, around 4,230 yuan/ton (calculated with ethylene), coal-based EG is about 13% cheaper. However, during the previous high coal price cycle in 2021, when coal prices surged rapidly, the cost advantage of the coal route completely vanished, and even the stability of feedstock supply was impacted, leading to a sharp decline in the competitiveness of coal-based EG plants. Natural gas-based syngas EG plants face similar challenges, constrained by cost increases from seasonal fluctuations in natural gas prices and potential disruptions to plant operations due to gas supply stability issues during heating seasons. In 2025, the average monthly operating rate for China's syngas-based EG plants was 58.3%, significantly lower than the 63.64% for ethylene-based plants. Many small and medium-sized syngas-based EG units lacking integrated feedstock resources face high costs for externally procured coal, resulting in insufficient competitiveness and leading to prolonged shutdowns.
Leading syngas-based EG enterprises are proactively tackling resource integration to break the deadlock, with cost optimization being the core pathway. Confronted with persistently declining cost competitiveness, leading syngas-based EG producers are actively pursuing resource integration strategies. By securing proprietary feedstock production capacity and optimizing process routes, they aim to lock in costs and build new competitive barriers, charting distinctive paths to overcome current challenges.
Xinjiang Zhongkun, a subsidiary of Tongkun Group Co., Ltd., has taken the lead in a strategic shift towards "gas-to-coal conversion + self-owned coal mines." It plans to convert the first-phase 600,000 tons/year natural gas-based syngas EG unit to a coal-based route, while simultaneously constructing配套 self-owned coal mines to achieve 100% self-sufficiency in coal feedstock. Upon completion, this retrofit is expected to optimize raw material costs and significantly enhance supply stability.
Sichuan Zhengdakai, a 600,000 tons/year natural gas-based syngas EG unit under the Zhengkai Group, has adopted a differentiated approach by acquiring natural gas exploration rights to achieve vertical integration at the feedstock level. On December 12, 2025, Zhejiang Zhengkai Group Co., Ltd. successfully won the bidding for the "Sichuan Basin Wanyuan North Block Petroleum and Natural Gas Exploration" mining rights, becoming the first such rights ever won by a private enterprise in the Sichuan-Chongqing region. The company has recently signed the mining rights transfer contract with the National Ministry of Natural Resources.
The most benchmark-setting project for the future is arguably Hengyi Group's Xinjiang 2.4 million tons coal-to-EG project. With a total investment of 25.7 billion yuan and scheduled for completion and operation in 2028, the project will utilize配套 lignite from the Aiding Lake mining area as feedstock. Leveraging Xinjiang's abundant and low-cost coal resources, it will minimize coal transportation expenses through the integrated operation of coal mines and chemical plants. Furthermore, it will supply low-cost and stable feedstock for its own downstream polyester capacity. Once operational, this project is poised to redefine the cost competition landscape for the coal-based EG route.
Looking ahead to 2026-2030, overcapacity pressures in China's EG industry are expected to persist, and competition between process routes will increasingly focus on the core of "low cost." Small and medium-sized units lacking resource integration will face even more severe challenges. Overall, China's EG industry has moved beyond the era of野蛮 growth through scale expansion and entered a new stage of refined competition. The quest for cost breakthroughs by syngas-based producers is not only a necessity for their own survival and development but will also drive the optimization and upgrading of the industry's process structure. Ultimately, this could lead to a pattern where oil-based and coal-based routes leverage their respective strengths for协同 development, providing solid support for the stable supply of the downstream polyester industry chain.