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Shares of Hengli Petrochemical hit the daily trading limit imposed by the exchange, despite the company denying allegations by the U.S. Department of the Treasury that one of its subsidiaries uses Iranian crude oil in its production process.
As of midday in Shanghai, Hengli was trading down 10%, at CNY21.10 (USD3.09) per share.
The Dalian-based company stated yesterday that it has never engaged in any trade with Iran. It confirmed that all of its suppliers have assured that their crude oil sources are not from regions subject to U.S. sanctions.
On April 24, the U.S. Department of the Treasury’s Office of Foreign Assets Control announced sanctions against Hengli Petrochemical Dalian Refinery, China’s second-largest independent oil refinery. The agency alleges that the company purchased billions of dollars worth of Iranian petroleum through shadow fleet vessels.
In response, Hengli has activated a specialized compliance mechanism and hired an international legal team specializing in sanctions to evaluate possible solutions. The company aims to lift the sanctions as quickly as possible.
The refinery has also been added to OFAC’s Specially Designated Nationals and Blocked Persons List, which prohibits entities from conducting transactions with U.S. individuals, businesses, and financial institutions without proper authorization. Assets within U.S. jurisdiction are also frozen.
These sanctions could extend to Hengli’s affiliated companies and non-U.S. firms or financial institutions that do business with them, as regulated.
Hengli emphasized that these sanctions will not affect other parts of its business, stating it has no subsidiaries, branches, or assets within the United States.
The company also noted its crude oil reserves are sufficient to support downstream processing for more than three months, and procurement operations remain stable. Hengli will continue to settle crude oil purchases in Chinese yuan, using a strategy that combines strategic reserves and market-based procurement to ensure diversified and secure transaction settlements.
As a leading Chinese producer of polyester and its key raw material, p-xylene, Hengli ranks 18th on Chemical and Energy News’ 2025 global Top 50 chemical companies list. Last year, its refining business generated CNY942.8 billion (USD130.1 billion), accounting for nearly half of the company’s total revenue.
Hengli’s core refining facility in Dalian functions as both a sales hub for refined oil products and a vital raw material supplier for its downstream polyester and new materials divisions.
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