Looking back at 2024, the global chemical market faces reshaping. China's exports of bulk chemicals are up, while imports are down. In Europe, by contrast, imports of chemical products have increased and exports have decreased. Global chemical industry profits are depressed, but high-end chemical margins remain stable. Looking forward to 2025, although the international chemical market faces challenges such as overcapacity and international trade barriers, the overall momentum is still stable and good, production capacity will increase rapidly, and the global trade pattern will continue to change.
2024: The reshaping of the landscape
Global capacity expansion has slowed and old capacity has been cleared
In 2024, the pace of global chemical product expansion has slowed down, and the new capacity of basic chemical raw materials is about 22 million tons/year, which is nearly 100% less than the new scale in 2023. However, due to the impact of continuous new production capacity in Northeast Asia in the past two years, the old production capacity of overseas chemical equipment has gradually increased. At present, the chemical plants of many companies in the world, including Mitsui, Taiyo, LG and so on, have been shut down successively, involving products including ethylene, styrene, refined terephthalic acid (PTA), polypropylene, etc., with a total production capacity of more than 4 million tons/year. In 2024, ExxonMobil and Sabik decided to permanently shut down their ethylene cracker plants in France (425,000 tons/year) and the Netherlands (530,000 tons/year).
The moderate recovery of the global economy has supported the growth of demand for petrochemical products
In 2024, global economic growth has generally remained resilient. Since 2025, the price index of major economies has continued to decline, inflation pressure has eased significantly, monetary policy has entered the cycle of interest rate cuts, and the global economy is moving toward a "soft landing", and the annual economic growth rate is expected to reach 3.2%, slightly higher than the 3.1% in 2023. Overall, the global demand for chemical products is recovering to a good trend. In 2024, global ethylene consumption will increase by 2.5% year-on-year, and paraxylene (PX) consumption will increase by 4.4% year-on-year. Synthetic resin consumption increased by 2.6% year-on-year; Synthetic fiber consumption increased by 4.5% year-on-year; Synthetic rubber consumption increased by 2.8% year-on-year.
However, in contrast, the situation of Northeast Asian naphtha is not optimistic. In 2024, international crude oil prices will remain at a medium high level under the influence of strong geography, weak supply and low demand. Continued weak demand for downstream olefin products and poor upstream cost transmission have led to the ethylene naphtha cracking spread in Northeast Asia falling below $200 / ton again, which has been below the break-even point for three consecutive years. At this price difference level, a large number of naphtha crackers are difficult to operate normally, and the on-load of crackers in the region falls to about 83%.
The pattern of production capacity has moved east, and the flow of trade has been reshaped
The geopolitical conflict has profoundly changed the flow of trade in the global chemical market. Due to the impact of geopolitical conflicts and the retirement of old equipment, European chemical imports have increased, while exports have decreased. At the same time, the import and export pattern of China's chemical products is also undergoing changes, and the export volume of bulk chemicals is rising, while the import volume is showing a downward trend. In 2024, China's total exports of ammonium sulfate, PTA, polyester, polypropylene and polyethylene reached 35.1 million tons, an increase of 20.4% over the previous year.
According to the International Energy Agency (IEA), while global oil demand has yet to return to pre-COVID-19 levels, demand for chemicals is on the rise. Global consumption of chemicals has continued to grow over the past three years. In 2024, the global consumption of synthetic resins was about 270 million tons, and by 2025, this figure is expected to grow to about 283 million tons. As the world's largest synthetic resin demand country, China's consumption of synthetic resin in 2024 reached 120 million tons. Since 2021, China's refining capacity has surpassed that of the United States, becoming the world's largest refining capacity. In 2022, China's ethylene production capacity has also surpassed that of the United States, becoming the first in the world. With the landing of many large-scale refining projects, China's position in the global refining industry has been significantly improved.
Profit differentials are significant and the low-carbon transition is stymped
In recent years, the profits of the global chemical industry have been depressed for a long time. Average gross margins for ethylene in the United States fell from $450 / ton in 2021 to about $300 / ton in 2023, and global gross margins for polyethylene and polypropylene also declined. Still, profit margins for some high-end chemical products have remained relatively stable. For example, thanks to the rapid development of the photovoltaic industry, the gross margin of polyolefin elastomers (POE) is expected to remain at a high level of 20% to 40% in 2024. Similarly, the gross profit margin of polyvinyl alcohol (PVA) has also remained at a high of 30%, and the profit per ton can reach 4,000 yuan.
At the same time, the chemical industry has high carbon emissions, and the fluctuation of carbon emission trading prices has begun to affect the cost and profitability of chemical products. The 2023 carbon price in parts of Europe has reached $82 per ton, which adds about $10 to $15 per ton to the cost of producing chemical products, adding to the already low profit margins of the global chemical industry. Looking forward to the future, facing the huge pressure of low-carbon transformation, chemical enterprises must start to promote the transformation from many aspects, which involves the reshaping of management, operation and profit model. With the continuous expansion and maturity of the carbon trading market, China may face a similar problem.
Market competition is fierce and trade barriers are high
In recent years, the phenomenon of long-term price inversion of some products has appeared in the international chemical trade market. Price inversion refers to the phenomenon that the purchase price of a certain commodity or service is higher than its sales price in the market transaction, resulting in reverse price differential. In 2024, thermoplastic styrene butadiene rubber (SBS) products are facing the double challenge of overcapacity and upside down prices, and the average price of the outer plate is about 1120 yuan/ton higher than the price of the inner plate.
The reason why the international market competition is so fierce is first because the resource-rich countries such as the Middle East and the United States take advantage of raw material cost advantages and advanced chemical technology to adopt more aggressive pricing strategies; Secondly, China's chemical products face a series of trade barriers in the international market, which seriously affects the development of export business. Specifically, the tariff rates for products such as resins in countries such as Indonesia and Turkey are at a disadvantage compared to major competitors such as South Korea. Indonesia imposes a 5% import tariff on domestic polypropylene, while the tax rate on products from South Korea and ASEAN countries is 0; Turkey imposes a 6.5% tariff on domestic polyolefin, while the tariff on polyolefin imports from Middle Eastern countries such as Saudi Arabia, the United Arab Emirates and South Korea is zero.
In addition, the EU imposed anti-dumping duties on China's polyvinyl alcohol, with a tax rate between 17.3% and 72.9%. The Indian government has also set trade barriers to China's chemical products by implementing BIS certification and levying anti-dumping duties and other measures. At the same time, since 2021, India has imposed anti-dumping duties of $36.90 to $121.79 per ton of aniline originating in China, valid for 5 years, and these trade restrictions have seriously affected the export of China's chemical products.
2025: Steady and good, slow recovery
A new round of capacity expansion has begun, and global petrochemical production capacity has grown rapidly
After a brief respite in capacity expansion in 2024, the global petrochemical industry will once again usher in a new round of production peak. In 2025, the global basic petrochemical raw materials will add 29.86 million tons/year of production capacity, an increase of 35%. Among them, China's new capacity will reach 18.3 million tons/year, accounting for more than 60%. Under the impact of the huge capacity scale, the load of most petrochemical products is facing downward pressure, and if we further consider the petrochemical products that will be put into production by the end of 2024 in China, the global petrochemical industry chain will face more severe challenges.
It is expected that by 2025, the global ethylene production capacity will increase to 240 million tons/year, and the PX production capacity will increase to 80.68 million tons/year. With the continued release of new capacity, the global ethylene utilization rate is expected to fall by 0.7 percentage points on average to about 80% in 2025, but North America and the Middle East ethylene due to significant cost advantages, the utilization rate will remain at a high level.
As the pace of expansion of the global PX industrial chain slows down, especially as the main producing area of China's PX production capacity expansion progress has slowed down significantly compared with the previous period, with the improvement of industrial supporting, the effective load of global PX stock devices will steadily increase. It is expected that in 2025, the average global PX plant operating rate will increase by 0.9 percentage points compared with 2024, to about 77%. In the future, under the impact of substantial capacity expansion in Northeast Asia, it is expected that the petrochemical industry in Europe and other places will be further adjusted, and the withdrawal rhythm of some old production capacity will be further accelerated.
The risk of overcapacity is high, and the supply of basic chemical products exceeds demand
With the rise of new energy, the global chemical industry is facing a long-term decline in oil demand. China's oil consumption will peak in 2025, and global demand for liquid fuels will also peak in the next five to 10 years. In Europe, the withdrawal of chemical production capacity is accelerating, and China is also facing the challenge of "oil conversion" and structural upgrading of the chemical industry. At the same time, global supply of basic chemicals is growing faster than demand, with the trend particularly evident in Asia. According to Dow Jones forecasts, by 2025, global ethylene, propylene and butadiene production capacity is expected to reach 238 million tons/year, 181 million tons/year and 18.94 million tons/year, respectively. China's "triene" production capacity is expected to reach 62.392 million tons/year in 2025, 75.8 million tons/year, and 7.89 million tons/year, ranking first in the world.
According to the global energy and chemical industry market information service provider ICis forecast that in 2025, the global six basic organic raw materials (ethylene, propylene, butadiene, benzene, toluene, xylene) production capacity is expected to exceed demand by 210 million tons. Some international oil and gas giants are also increasing chemical production capacity, ExxonMobil announced that it will reduce about 20% of European refining capacity in the next five years, and shift to the development of biofuels and related chemical products and other renewable energy sector; Chemical giant BASF has proposed a "net zero emissions" goal and invested in new technologies to increase the production capacity of plastic products; Saudi Aramco plans to add 15 million tons of chemical capacity over the next five years. The combination of overcapacity and the economic slowdown has led to a decline in the load rate of chemical plants, a squeeze on profit margins and a delay in the commissioning of new plants, further aggravating the dilemma of shrinking chemical consumption.
Regional economic performance differentiation is obvious, ethylene consumption differentiation recovery
In 2025, with monetary policy adjustments and easing inflationary pressures in advanced economies, especially after the Federal Reserve cut interest rates, the US economy is expected to experience steady growth. At the same time, with the weakening of external pressure and the continuous adjustment of their economic structure, the economic growth and trade potential of emerging economies such as Southeast Asia may be further released. At the same time, the demand for overseas replenishment after the novel coronavirus epidemic is strong, and the continuous expansion of the global market will play a certain positive role in driving the consumption of petrochemical products.
In terms of synthetic resins, Northeast Asia is still the world's main consumer market. As high-quality Belt and Road cooperation continues to advance and the influence of the Regional Comprehensive Economic Partnership (RCEP) continues to expand, the vitality of the Asian market will be greatly stimulated. At the same time, the Asian region has a large population, although per capita consumption of resin is generally low, but with economic growth, per capita consumption increases, infrastructure, packaging, daily necessities and other fields of resin product demand potential is huge, especially in recent years, the Indian economy to maintain high growth, or will become the next global economic growth engine. It is expected that in 2025, global synthetic resin consumption will increase to about 300 million tons, an increase of 2.7%, and an increase of 0.1 percentage points compared with 2024.
In terms of synthetic fibers, China, as the world's largest producer and consumer of synthetic fibers, will account for more than 80% of the world's synthetic fiber production in 2024. It is expected that in 2025, factors such as the growth in demand for domestic terminal textile and garment and home textile markets and the return of foreign textile orders will further promote the demand for synthetic fibers. In 2025, global synthetic fiber consumption is expected to increase to about 86 million tons, an increase of 4.1% year-on-year.
In terms of synthetic rubber, driven by domestic demand and exports in China's market, the global car ownership is expected to further increase, forming a rigid support for the synthetic rubber industry. In 2025, global synthetic rubber consumption is expected to increase to about 10.6 million tons, an increase of 2.9%.
The global trade pattern of petrochemical products is further adjusted
In recent years, global trade growth has been sluggish due to the impact of slowing economic growth, escalating trade protectionism and economic fragmentation. According to the International Monetary Fund, in 2025, with the improvement of the global economy, global trade growth is expected to rebound to about 3.2%.
Judging from the flow of trade, the current international situation is still complex and grim. The momentum of global economic growth is weak, and international trade frictions are frequent. In this context, global petrochemical trade flows will continue to adjust. With the gradual increase of trade tariff barriers in Europe and the United States, China's export market to the United States will face greater pressure. Asean and other emerging economies benefit from the demographic dividend, long-term economic growth potential continues to release, foreign investment attraction continues to increase, it is expected that more products in the world will further turn to Central Asia, the Middle East, Southeast Asia, Africa and other emerging economies market to seek growth. In the EU, affected by low-carbon energy transformation and oil and gas shortage, the proportion of production capacity and market share are declining year by year. The long-term shortage of petrochemical products in Europe has also created market space for exports from the United States and the Middle East to Europe.
Chinese chemical enterprises should promote industrial upgrading and expand the international market
At present, the global chemical industry is experiencing a low boom cycle of overcapacity. China's chemical enterprises should face up to the inevitable cyclical trough in the process of industrial upgrading and transformation, deeply understand the development status of the industry, on the basis of learning from international advanced experience, combined with their own reality to formulate and implement corresponding strategies to promote the high-quality development of the chemical industry.
First of all, we must accelerate the transformation and upgrading of chemical production capacity. By adjusting the industrial structure and optimizing the layout strategy, the proportion of high value-added products will be increased. Increase capital, resources and technology investment, occupy the global high-end advantage position, focus on the development of new materials, such as carbon fiber, aramid and other high-performance fiber materials, high-performance polyolefin, special engineering plastics, etc., to improve the added value of products. With the help of overseas high-quality light hydrocarbon resources, increase the import of light hydrocarbon raw materials such as ethane, reduce the cost of chemical raw materials, improve economic efficiency and cost competitiveness in the international market.
Second, in some emerging markets, upstream chemical capacity growth is lagging behind downstream chemical product demand growth. We should actively explore the international market, find new customer resources, and increase the export volume of chemical intermediates, synthetic materials and other products. By expanding the scale of trade with countries jointly building the "Belt and Road" and RCEP member countries, we will enhance our pricing power and brand awareness in the international market, and realize the transformation from scale advantage to value advantage.
We will strive to promote the high-quality development of chemical business
Looking to the future, in the face of the imbalance between supply and demand in the chemical market, cost competition will dominate the development of the industry for a long period of time. The chemical industry should seize the window period in the next three years or so to make up for weaknesses and strong and weak terms. Focus on the pressure reduction of raw materials, fuel, public works, labor and other costs, strengthen the integration of production, marketing and research to create differentiated competitive advantages, and take a series of pragmatic measures to make the cost indicators of the chemical business reach the industry advanced level, and consolidate the chemical business to turn losses into profits
