PetroChina Dushanzi Petrochemical has successfully completed the first-time start-up of its Tarim Phase II ethylene and supporting green low-carbon demonstration project, marking a major milestone for China's petrochemical industry. The project adds 1.2 million metric tons per year of ethylene production capacity and establishes the country's first and only 3-million-ton-per-year ethylene production base in central and western China. This achievement is expected to significantly strengthen regional petrochemical production while reducing the western region's dependence on supplies from eastern coastal provinces.
Located in Shangku Industrial Park in Korla, Xinjiang, the project represents a total investment of approximately 25.66 billion yuan. Construction began in May 2024 and was completed within just 22 months, meeting the planned production schedule. The industrial park is recognized as one of China's first national-level zero-carbon parks focused on energy-intensive petrochemical industries, reflecting the project's strong emphasis on sustainable development.
At the heart of the development is the new 1.2 million tpa ethylene cracker, supported by several downstream chemical units producing a broad portfolio of petrochemical products. These include high-density polyethylene (HDPE), full-density polyethylene (FDPE), polypropylene (PP), ethylene-vinyl acetate (EVA), cis-polybutadiene rubber, benzene, and toluene. These products serve key sectors such as packaging, automotive, construction, consumer goods, and advanced manufacturing.
The commissioning of the facility is expected to optimize China's petrochemical production landscape by improving the availability of olefin feedstocks in western regions. Historically, domestic ethylene production has been concentrated along the eastern coast, creating logistical challenges and supply imbalances. The new facility strengthens supply chain resilience, enhances raw material security, and supports industrial development across Xinjiang and neighboring provinces while also improving export opportunities to Central Asian markets.
A defining feature of the project is its advanced environmental design. PetroChina has established the world's first carbon emission recycling demonstration base for ethylene cracking furnaces, incorporating carbon dioxide capture and utilization technology to recycle emissions from cracking flue gas. The system is expected to reduce carbon emissions by approximately 1.37 million tonnes annually. The project also maximizes the use of local ethane and light hydrocarbon resources from the Tarim Basin while expanding electrification and renewable power integration, creating a low-carbon petrochemical production model.
Additionally, the project achieved an equipment localization rate of 99%, demonstrating significant progress in China's domestic manufacturing capabilities for large-scale petrochemical equipment. Once operating at full capacity, the complex is expected to improve regional self-sufficiency in high-end polyolefins and synthetic rubber, accelerate downstream materials manufacturing in Xinjiang, and reinforce China's long-term strategy of developing integrated, green, and resilient petrochemical value chains.
Impact on Prices of Chemical Commodities Tracked by ChemAnalyst
The addition of 1.2 million tpa of new ethylene capacity is expected to exert moderate downward pressure on regional prices of ethylene and its downstream derivatives over the medium term as supply increases. Commodities tracked by ChemAnalyst, including HDPE, LDPE, LLDPE, polypropylene, EVA, benzene, toluene, and synthetic rubber, may witness improved supply availability, reducing supply tightness in western China. Freight cost savings and shorter delivery times could further soften regional pricing. However, any immediate price decline may remain limited as downstream demand absorbs new volumes gradually. In the longer term, stronger domestic production should improve market stability and reduce import dependence.
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