Asia's petrochemicals deeply trapped in multiple predicaments, structural restructuring will take at least five years, not much better than europe?

The profit margins of the Asian olefin industry have been persistently negative for a long time. Production companies are struggling to survive amidst the conflict of oversupply and weak demand, and the painful restructuring process may continue until2030

The Asian petrochemical industry is undergoing unprecedented complex challenges.

2025Asia Pacific Petroleum Conference (APPEC)APPECIndustry experts unanimously believe that the perfect storm of oversupply, weak demand, and raw material price fluctuations has already swept across the entire Asian petrochemical market.

Director of Olefins and Derivatives at S&P Global Commodity InsightsPaul JooAfter years of challenges, the chemical industry is seeing a glimmer of hope, but for olefin profit margins in Asia to turn positive,2030Maybe possible in a few years.

How challenging must the Asian olefin industry be for professionals to make such a judgment?

1. Industry Dilemma: Supply-Demand Imbalance and Profit Shrinkage

The core issue currently facing the Asian petrochemical industry is severe overcapacity and prolonged weak demand.

Even though olefin margins in Asia have been negative for the past few years,2024 2025In Northeast Asia during the year, the newly added ethylene production capacity also exceeded.1000 /

According to data from S&P Global,9 10Northeast Asia ethylene prices remain stable.840 / Tons, during the same period, the naphtha price in Japan was603.25 /The price difference between ethylene and naphtha is only236.75 /

The breakeven point for the integrated upstream and downstream unit is250 /Ton, for non-integrated devices.300 350 /Tons, it's all running at a loss anyway.

The continuous addition of new capacity and ultra-low profit margins have directly led to the forced shutdown of multiple steam cracking units in Asia.

Vice President of Chemicals and Materials at S&P Global Commodity InsightsAndrew NealeIt is indicated that recently about400 /The cracking capacity will be shut down, and there are also100 /Annual production capacity may be shut down.

However, it is still difficult to influence the supply pattern of the global olefin market unless shutdowns occur.20Large-scale cracking units and above.

Polyester industry chainPTAThe market is in the same situation.

Ganesh, General Manager of Petrochemical Trading at TotalEnergies Asia Trading Company, said in the past5The global trade volume decreased by approximately.35%Among them, the decline in aromatic products is the most noticeable.

2025 9At the beginning of the month, the prices in the polyester industry chain are also operating under pressure.PTAThe overall performance of the main futures contracts is weak, and market demand is generally sluggish.

2. Capacity Adjustment: East Asia Leading the Industry Restructuring Wave

Amidst the deep turmoil, all companies are either proactively or passively restructuring their operations.

The current news is that Japan has at least3Steam cracking unit for naphtha.2028The Chiba ethylene plant of Marubeni and the Chiba plant of Idemitsu Kosan were shut down years ago.JXKawasaki Plant of Energy.

2028After the annual plan is implemented, Japan's ethylene production capacity will decrease.20%。

The South Korean government held talks.10Leading enterprises in the industry, and recommend reducing the total production capacity of ethylene.270 370 /

PTACapacity adjustments in the field are also underway.

As of this year10In mid-month, many plants in Asia are shut down, Sanfangxiang.120Ten-thousand-ton facility, Formosa Industries120 10,000-ton plant, Yisheng Dalian225The restart time for the equipment with a capacity of ten thousand tons is still unclear.

9At the end of the month, there were reports in the market stating that,PTALeading industry manufacturers are meeting to discuss the exit of outdated production capacity and the control of additional capacity, as the dire market situation has forced the industry to self-regulate.

3. Weak Demand: The Terminal Market's Lackluster Recovery

The initial reason for capacity expansion must have been an overestimation of demand, particularly the unfulfilled desire for a rapid economic recovery after the pandemic.

So the real challenge comes from the market demand side, and the challenges on the demand side are multifaceted.

Affected by the ongoing fluctuations and uncertainties caused by tariffs,2025The annual increase in chemical demand is expected to decline.25%However, in the long term, the demand for chemicals will continue to grow.

The petrochemical industry is in a much worse situation than the chemical industry due to more influencing factors.2025The market conditions in the coming years will be difficult to improve.

In the polyester industry chain, it is currently the peak season for autumn and winter home textiles and clothing fabrics. The domestic market for these products has slightly improved, and the industry's capacity utilization rate has slightly increased. However, foreign trade orders remain scarce.

The number of new orders in the textile industry is also limited, and demand is weaker than expected, mainly focusing on fulfilling previous orders. The enthusiasm for raw material procurement is relatively low.

4. Raw Material Strategy: Coping Strategies for Volatile Markets

Geopolitical issues are frequent, multilateral trade situations are tense, and Asian petrochemical companies are facing serious uncertainties in their raw material supply.

S&P Global Commodity Insights Deputy Director of Technology ResearchApril TanI think,2024The crude oil prices of the year are near100 /Bucket, recently has dropped to70 /The fluctuations below the barrel have a significant impact on the procurement strategies of manufacturing enterprises.

AprilTan 2026The price of crude oil this year may be in65 /The barrel fluctuates from side to side, requiring companies to adopt a more cautious raw material procurement strategy.

The cost differences between various process routes in the ethylene industry are significant, with the ethane route having the most apparent cost advantage.

Many naphtha cracking units in Asia are evaluating the feasibility of switching from naphtha to ethane cracking.

Paul Joo 2025 2027Year, Asia and Europe will have4Commissioning of the ethane cracking unit, with a total production capacity of415 /

He also believes that global demand for ethane will continue to grow, but the supply of ethane in the United States may2035The peak slows down before and after the year.

V. Technological Breakthrough: Integration and Cost Control

The industry's predicament is global, petrochemical products (COTCThe plan, referred to domestically as the "oil reduction and chemical increase" policy, is the most feasible direction.

S&P Global Commodity Insights, Asia-Pacific RegionC4Anthony, the Deputy Director of the Elastomer Department, believes that the vast majorityCOTCProjects all have the advantage of integration.

COTCThe factory can adjust its production focus between different products such as fuel and chemicals, based on market demand.

Integrated factory logistics processes are more streamlined, have lower costs, and offer clear advantages.50% 60% COTCThe factory is focused on the production of chemicals.

Brent Fishel, President of Chevron International Products, believes that the prolonged downturn in the petrochemical industry has led to many investments in the Asian oil industry shifting from refining to many light products.

Although the cost advantage of raw materials is significant, the return on investment in the short to medium term remains low.

6. Final Summary

The Asian petrochemical industry is undergoing a long-term and profound structural adjustment.

Faced with the triple pressures of oversupply, weak demand, and raw material price volatility, manufacturing enterprises have no choice but to reassess their strategic positioning.

Paul JooThe oversupply situation in the Asian olefin market is expected to possibly require3 4It will take years to alleviate.

During this period, industry consolidation, capacity elimination, and technological upgrading are the main themes of the industry.

For the Asian petrochemical industry, the road ahead remains long, and only those companies that can adapt flexibly to the market, continuously optimize their product structures, and strictly control costs can successfully navigate through this major industry crisis.