Strong Petrochemical Holdings Limited Reports Expected Loss of USD10.7 Million in Bitumen Trading Transaction
Key Points
- Significant Expected Loss: Strong Petrochemical Holdings Limited is expected to record a loss of approximately USD10.70 million from a recent bitumen products trading transaction.
- Transaction Details: The loss stems from a framework contract, signed in November 2025, by the Company’s wholly-owned subsidiary Nantong Strong International Trading Company Limited (“Nantong Strong”) and Strong Petrochemical Limited (“Strong HK”) to purchase about 1.65 million barrels of bitumen products in 2026 for domestic resale as road asphalt raw material.
- Operational Challenges: The imported bitumen products were subjected to prolonged customs inspections, and product classification issues led to unexpectedly high selling costs.
- Adverse Market Conditions: During the product’s detention, geopolitical conflicts in the Middle East escalated, resulting in increased transportation costs, sharp volatility in crude oil prices, and reduced demand from customers in Mainland China.
- Cumulative Impact: The combined effects of unfavorable purchase and sale price differences, storage and demurrage charges, and related hedging arrangements contributed to the anticipated USD10.70 million loss.
- Preliminary Assessment: The loss estimate is based on management’s initial assessment and has not yet been audited.
- Board’s View: The Company believes that this loss will not have a material adverse effect on its ongoing operations.
- Risk Management Response: The Group intends to strengthen compliance, monitor international developments, and improve risk management in its commodity trading business.
- Continued Suspension of Trading: Trading in the Company’s shares has been suspended since 31 December 2024 and will remain suspended until further notice.
Important Information for Shareholders
- This announcement of a substantial expected loss is likely to be price sensitive and could impact investor sentiment regarding the Company.
- Shareholders and potential investors are expressly advised to exercise caution when dealing in the Company’s shares due to the ongoing trading suspension and the financial impact of the trading loss.
- The Company’s management has highlighted their intention to address follow-up matters from the transaction and to reinforce business processes to mitigate similar risks in the future.
- Ongoing geopolitical instability and volatile commodity markets remain a risk for future operations.
Full Transaction Context
In November 2025, Strong Petrochemical Holdings Limited, through Nantong Strong and Strong HK, entered a framework contract with an independent supplier agent for the import of approximately 1.65 million barrels of bitumen products in several batches throughout 2026. The goal was to sell these products domestically for use in road asphalt production.
However, unforeseen operational issues arose. Customs authorities subjected the shipments to unusually long inspections, and the bitumen’s classification did not meet expectations. This not only delayed the transaction but also increased selling costs substantially.
Compounding these issues, the period of customs detention coincided with an escalation of geopolitical conflicts in the Middle East. This led to higher transportation costs, increased volatility in crude oil prices, and a significant decline in demand from customers in Mainland China. The result was a challenging market environment that severely affected the Group’s cost and risk management.
After factoring in the difference between buying and selling prices, storage and demurrage charges, and the outcome of related hedging activities, management expects the Group to record a loss of approximately USD10.70 million on this transaction.
The Company’s Board emphasizes that this figure is a preliminary assessment and unaudited. They believe the loss will not have a material adverse impact on the Group’s ongoing operations, but are taking steps to enhance compliance, closely monitor international developments, and improve risk management in light of an increasingly complex global environment.
Trading in the Company’s shares remains suspended since 31 December 2024 and will continue to be suspended until further notice. Investors should be aware of the heightened risks and exercise caution.
Board Composition (as of 19 May 2026)
- Chairman: Wang Qihong
- Executive Directors: Dr. Wang Pang Paul, Mr. Cao Xinzhong
- Non-Executive Director: Mr. Wang Jian Sheng
- Independent Non-Executive Directors: Mr. Wang Qihong, Dr. Lu Guoyang, Ms. Tam Yuk Yu
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors are advised to exercise caution and consult their own advisors before making any investment decisions. The information is based on the Company’s official announcement and has not been independently verified or audited.
