Caustic soda is a core basic chemical in the chlor-alkali industrial chain. Its production via raw salt electrolysis generates chlorine gas as a by-product, an essential feedstock for PVC manufacturing. The operational performance of chlor-alkali enterprises hinges heavily on load matching between chlor-alkali products, energy cost control and industrial chain coordination. Inner Mongolia Junzheng Energy & Chemical Group Co., Ltd. (Junzheng Group, Stock Code: 601216) is located in Wuhai, Inner Mongolia, a national-level chlor-alkali industrial base. Leveraging resource endowments in Northwest China, the company has built a complete coal-power-chlor-alkali circular economy industrial chain. The synergistic production of caustic soda and PVC underpins the core business foundation of its energy and chemical segment.
Based on latest public capacity data, Junzheng Group boasts a designed annual caustic soda capacity of 550,000 tons, matched with 800,000 tons of annual PVC capacity. Its product portfolio mainly consists of industrial caustic soda flakes and liquid caustic soda, widely supplied to downstream sectors including alumina, papermaking, printing and dyeing, water treatment, building materials and chemical intermediates. Unlike chlor-alkali manufacturers in eastern coastal regions, Junzheng is situated in Wuhai, where coal and limestone resources are abundant nearby. Local raw material procurement greatly cuts land logistics expenses. The chlor-alkali electrolysis process produces caustic soda alongside co-generated chlorine gas, all of which is internally consumed for PVC production. This realizes closed-loop utilization of chlorine resources, eliminates the need for external liquid chlorine sales, avoids operational risks arising from liquid chlorine storage, transportation and volatile export prices, and achieves natural capacity balance between caustic soda and PVC.
Power cost represents the largest expenditure in the chlor-alkali industry. Electrolysis for caustic soda production and calcium carbide synthesis for PVC are both highly energy-intensive processes. Junzheng supports self-owned power generating units with a total installed capacity of 1.635 million kW, maintaining a power self-sufficiency rate above 90% over the long run. Supported by local coal resources, its captive power plants deliver electricity at costs far lower than purchased grid power, forming a core cost moat. Upstream in the industrial chain, the company operates a 2.383 million-ton-per-year calcium carbide facility with sufficient self-supply to guarantee stable PVC output. Calcium carbide slag is further recycled to produce cement clinker, enabling solid waste resource utilization and continuously lowering overall environmental and disposal costs. The integrated circular industrial chain connects coal mining, power generation, calcium carbide production, chlor-alkali processing and building materials. In-house material circulation eliminates markup from intermediate traders, equipping the company with stronger resilience against losses during industry downturns.
From an operational perspective, the caustic soda business serves as a critical profit buffer for Junzheng. Downstream demand for PVC is closely linked to real estate and infrastructure, leading to pronounced cyclical fluctuations, while caustic soda has diversified downstream demand with steady support from rigid sectors such as alumina and water treatment. Under the co-production mechanism of the two product lines, the company can flexibly adjust sales strategies in response to market conditions. When PVC market sentiment weakens, caustic soda generates steady earnings to smooth performance volatility. During upward cycles for caustic soda, overall profitability of the full production complex is further lifted. According to the 2025 financial report, the caustic soda segment delivered robust profitability, effectively offsetting pressure from falling PVC prices and fully demonstrating the cycle hedging value of the chlor-alkali co-production model.
Beyond its energy and chemical segment, Junzheng also develops global chemical logistics business with large-scale liquid chemical fleets and tank container assets. Logistics capabilities support production and sales synergy: bulk chemicals such as caustic soda and PVC can be transported domestically and exported via its proprietary logistics network. The firm can independently adjust the ratio of domestic and overseas sales to ease periodic supply-demand imbalance in the domestic market. Chlor-alkali enterprises in western China commonly face challenges including remote distances from major eastern consumption hubs and constrained outbound transport capacity. The self-owned logistics system grants Junzheng differentiated operational advantages.
Extending the industrial chain constitutes Junzheng’s medium-to-long-term development priority. Drawing on existing coal coking resources, the company has commissioned a 300,000-ton-per-year BDO plant and a 120,000-ton-per-year PTMEG facility, shifting from basic chlor-alkali raw materials toward fine chemicals and new materials to foster a second growth curve. In terms of low-carbon transition, Junzheng carries out research on wind and solar power generation and green hydrogen. It continuously advances energy-saving retrofits for production facilities to align with national policies on energy consumption control and low-carbon development and reduce carbon emissions from traditional coal chemical operations.
At the industry level, the supply landscape of China’s chlor-alkali sector keeps optimizing. Strict environmental and energy consumption regulations restrict new capacity approvals and accelerate the phase-out of outdated small-scale installations. Industrial capacity is gradually concentrating in leading enterprises in Northwest China with integrated low-cost energy advantages. On the demand side, caustic soda is underpinned by consumption from alumina and environmental water treatment sectors, whereas PVC demand fluctuates alongside activity in infrastructure and plastic products. Benefiting from low-cost energy resources, Northwest China will remain a core domestic supply base for chlor-alkali products over the long term.
Objective risks cannot be overlooked. Both caustic soda and PVC are highly cyclical bulk commodities; their prices swing sharply with macroeconomic conditions, industry operating rates, and prices of raw materials including coal and industrial salt. Long-distance outbound transportation from western regions brings persistent logistics cost pressure. Commissioning of new integrated chlor-alkali projects in the region in the future will intensify market competition. Meanwhile, tightening energy consumption and environmental supervision may trigger sustained capital expenditure for technical upgrades.
Overall, Inner Mongolia Junzheng’s core competitiveness does not rely merely on production scale. Instead, it arises from overlapping strengths including geographic resource endowments, captive power supply, closed-loop chlor-alkali co-production, complete circular economy industrial chain and proprietary chemical logistics. The chlor-alkali business featuring synergistic caustic soda and PVC production forms a stable cash flow foundation for Junzheng’s energy and chemical division, supporting the enterprise’s upstream resource integration and downstream expansion into fine new materials. Amid stock competition within the chlor-alkali industry, the integrated low-cost route serves as Junzheng’s most important industrial foundation to weather chemical industry cycles.
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