28% Shareholder Return Leads the Way! As Europe and South Korea's Petrochemical Markets Recede, India Rises

On September 17, Zhuan Su Shijie observed，Boston Consulting GroupThe 13th "Chemicals Value Creation Report" released by BCG reveals a dramatic industry shift.While traditional chemical powerhouses such as Europe and South Korea are mired in a recession, India is leading the world with an average annual total shareholder return (TSR) of 28%, becoming the most dazzling growth pole in the global chemical industry from 2020 to 2024.

Source of the image: Reuters

Europe: Amid the Energy Crisis"Cut off an arm to survive"

The European petrochemical industry is experiencing the most significant capacity clearance since World War II. According to data from S&P Global Commodity Insights, as ofBy September 2025, seven steam cracking units in Europe have been permanently shut down or scheduled for closure, resulting in a cumulative reduction of 4.5 million tons per year of ethylene capacity, 2.3 million tons per year of propylene, and 430,000 tons per year of butadiene. This accounts for 8% of the total olefin production capacity. This "darkest moment" stems from a triple shock:

Energy costs soar: After the Russia-Ukraine conflict, European natural gas prices have retreated from their peak, but long-term contract prices remain higher than U.S. shale gas.3-4 times, directly increasing ethylene production costs by approximately 200 USD/ton;

Demand collapse: downstream industries such as automotive and packaging are dragged down by the energy crisis.In 2024, the EU's plastic consumption decreased by 5.2% year-on-year, marking the largest decline since the 2008 financial crisis, with the operating rate of ethylene plants remaining consistently below 75%.

Industrial Restructuring: Giants such as BASF, INEOS, and Shell take the lead in shutting down core facilities, with the capacity share of traditional bases in Northwest Europe, such as Germany and the Netherlands, being affected.A shutdown rate of 78% marks the region's industrial transition from "oil-based" to "gas-based," but the transition process may be slower than expected due to restrictions on North American ethane exports.
"This is not a cyclical adjustment, but a complete restructuring of the industrial ecosystem," pointed out Mark Erastus, Vice President of S&P Global. When energy costs account for more than 60%, "shutting down facilities is more in line with business logic than maintaining operations."

South Korea: Under Structural CrisisCold Winter

The South Korean petrochemical industry is facing the most severe structural crisis since its establishment. As the fourth largest export sector,The "Big Four Petrochemical Companies" (Lotte Chemical, LG Chem, Hanwha Solutions, and Kumho Petrochemical) are expected to shift from profit to a loss of 878.4 billion KRW in 2024, with the loss further expanding to 500 billion KRW in the first half of 2025. Their sales have consecutively decreased by 7.8% year-on-year for four quarters.
The root of the crisis lies in uncontrolled costs and a rigid business model.

Cost advantage: Ethylene production in South Korea through naphtha crackingNCC) as the main player, the unit cost is 70% higher than that of the Middle East and 15%-20% higher than that of China; in the first half of 2025, the sales cost rate of major enterprises reached as high as 98.6%, with HD Modern Chemical even reaching 107.3%. Some enterprises have fallen into the predicament of "producing at a loss."

Mode failure: long-term dependencyThe business model of "naphtha cracking - ethylene export" is becoming unsustainable under the pressure of rising international raw material prices and the expansion in the Middle East and China. The breakeven point for ethylene has dropped from $300/ton to $220/ton, which is well below the warning line.

Energy pressure: Industrial electricity prices are relativelyIn the first quarter of 2022, it rose by nearly 65%, accounting for as much as 60% of production costs, further squeezing profit margins.
The Bank of Korea warns that this is no longer a cyclical downturn, but rather..."Structural competitiveness decline," if not reformed, the industry may continue to shrink.

India: The Triple Drivers of Demand, Policy, and Valuation

Against the backdrop of recession in Europe, the United States, and South Korea, the Indian chemical industry, however, has...A five-year total shareholder return of 28% (global average 7%) has surged strongly, becoming a new engine of global value creation. The BCG report points out that this performance stems from three core drivers:

Strong domestic demand: As the world's fifth-largest economy, India's populationThe consumption potential of 1.4 billion continues to be unleashed, with rapid growth in sub-markets such as agricultural chemicals, personal care, and engineering/high-performance materials.

Policy Targeted Support: The government provides production-linked incentives (Policies such as the PLI scheme and tax incentives are guiding capital towards high value-added sectors (such as pharmaceutical intermediates and specialty chemicals), while also promoting the implementation of the "Make in India" strategy.

Investor sentiment improves: inUnder the "China +1" supply chain diversification trend, India has become the preferred destination for multinational companies to relocate their production capacity, with valuation multiples rising as market confidence improves.
Amit Gandhi, Managing Director of BCG India, emphasized: "The next phase of India's progress depends on how it chooses to scale - whether by strengthening existing value chains or by venturing into new value chains." This is both a challenge for Indian enterprises and a key to their continued leadership.

Conclusion:

The ebb and flow of the global plastic chemical industry is essentially the result of the combined effects of energy costs, market demand, and industrial policies. The decline of Europe and South Korea reveals the vulnerability of traditional high-cost regions in global competition; meanwhile, the rise of India confirms that...The effectiveness of the "Demand-Policy-Capital" triangular model.
According to the BCG report, in a challenging environment, only companies that "focus on business excellence, strict capital allocation, and portfolio quality" can continue to create value. For the global chemical industry, this major transformation is both a crisis and the starting point of a new order—and India is at the forefront of this new order.