End of year elimination of inefficient capacity below 2 million tons? "anti-involution" wave sweeps the petrochemical industry! what is the impact?
There are reports that the Ministry of Industry and Information Technology plans to introduce a measure for the petrochemical and refining industry this month.Comprehensive Reform PlanProposed throughEliminate small and outdated facilities, upgrade old equipment, and guide the industry towards high-end transformation.Implement measures to systematically address the long-standing issue of overcapacity.
In July, the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Ecology and Environment, the Ministry of Emergency Management, and the State-owned Assets Supervision and Administration Commission of the State Council jointly issued..."Notice on Conducting a Survey and Evaluation of Old Units in the Petrochemical and Chemical Industry"Regulations have been made regarding the assessment of old production equipment.
Afterwards,Hunan, ShandongSeveral major chemical provinces took the lead in responding and initiated the investigation work.The main equipment and facilities have reached their designed service life, or the outdated production units have been in operation for more than 20 years since actual commissioning.This marks the first nationwide census.
A series of policies have been intensively introduced, directly targeting the industry."Severe overcapacity""Low-end low-value"Pain point.
How should the chemical industry "counter involution"? What impact will it have on China's chemical industry? This is worth exploring.
1Supply-side capacity control
This is not the first time the petrochemical industry has introduced an "anti-involution" policy; rather, it is a further deepening and advancement based on existing policies.
In the first half of 2025, China's chemical industry is facing insufficient revenue andDecline in profit marginMost small and medium-sized chemical companies are on the verge of losing money, and even leading companies are experiencing a decline in profits.Internal competition is intense, there is overcapacity, and products are highly homogeneous.The weak performance of the chemical industry is attributed to the aforementioned reasons.
The central level proposes "anti-involution."”Policy aimed at promotingHigh-quality industry development, enhancing industry profitability.。
According to relevant data, the current capacity utilization rate of the domestic refining industry is 70%-80%, with excess capacity of about 60 million tons. The rapid expansion of the refining industry, combined with weak downstream demand, has already led to a rapid decline in utilization rates.
It is imperative to control the "scale expansion - inefficient competition" model in the refining and petrochemical industry from the source.
To solve the problem of severe overcapacity, it is necessary to control it from the "supply-side" structure.
The country has clearly stated that by 2025, the domestic primary crude oil processing capacity should be controlled within 1 billion tons, with the proportion of refining capacity at the ten-million-ton level accounting for about 55%. The aim is to prevent unchecked capacity expansion, which could lead to prominent issues in the refining industry, such as low efficiency, low quality, low profit, high pollution, and high risk.
2Accelerate the elimination of outdated production capacity.
Accelerating the phase-out of outdated production capacity and promoting the renovation of old facilities are key measures to enhance the overall competitiveness of the industry.
According to the proposed policy, about 40% nationwide,Petrochemical facility in operation for over 20 yearsUpgrades need to be completed to improve production efficiency.Annual production capacity below 2 million tons.The small refineries will be gradually shut down.
The aging of petrochemical equipment exists.High energy consumption, significant safety risksThrough technological upgrades and modifications, energy efficiency, environmental protection, and safety standards can be improved.
On the other hand, outdated production capacity generally suffers from issues such as outdated technology, low energy efficiency, and non-compliance with pollution control standards. Whether in the refining industry or the petrochemical industry, they are key sectors of energy consumption and carbon dioxide emissions.
This measure aims to further enhance the energy resource utilization efficiency in the petrochemical and refining industries, while also making advance planning and arrangements to achieve the "30-60" dual carbon goals.
3The product structure extends towards high-end and high value-added.
The proposed reform plan also suggests guiding industries towards high value-added sectors, encouraging factories to reduce the production of oversupplied bulk chemicals such as polyethylene and polypropylene, and focusing on...Artificial intelligence, robotics, semiconductors, biomedical devices, new energy batteriesThe needs of these fieldsSpecialty fine chemicalsPromote the product structure towardsHigh-end transformation。
According to informed sources, ethylene, which is a core raw material for plastics, rubber, and textiles, may face potential challenges starting from 2026 due to new plant projects planned to be operational before 2028.New License Issuance RestrictionsTo avoid repeating"Overcapacity - Low-price Export - Trade Friction"The same mistakes.
Data shows that, as of now, China's ethylene production capacity has exceeded 60 million tons per year, accounting for more than 35% of the global total capacity, ranking first in the world for five consecutive years. It is estimated that this year's ethylene production capacity growth rate will reach 13.2%, while the consumption growth rate is only 6.07%, further widening the supply-demand gap.
If the new production capacity cannot be absorbed by the domestic market, Chinese companies are likely to alleviate the pressure through low-priced exports, increasing the risk of trade friction.
As one of the main downstream consumption products of ethylene,High-end polyethylene (PE) productsThe import dependency remains very high, among which,Metallocene Polyethylene (mPE)The self-sufficiency rate is less than 20%, and the localization rate of POE film material is only 5%.
Enhancing product value and intensively cultivating high-end sectors have also become key strategies for Chinese enterprises to break through challenges.
The shift from extensive expansion to high-quality development is an inevitable stage for China's chemical industry.
Ma Jiangtao, Vice President of the Henan Petroleum and Chemical Industry Association, predicts that in the next 3 to 5 years, outdated enterprises will be completely eliminated, the market structure of the chemical industry will be further optimized, and industry concentration will be further increased.High skill, high intelligence, low energy consumptionHigh-quality companies will become industry leaders, playing a leading role in technological innovation, product quality, and environmental protection, driving the chemical industry towards...High-end, green, intelligentAccelerate progress in that direction.
Industry insiders believe that the comprehensive adjustment of China's chemical industry may not be a short-term pain, but rather a...Policy, market, technology.
The new ecosystem of the chemical industry is being formed, driven by systemic changes powered by the force of capital. Companies with advantages in full industry chain integration and leading capabilities in technological innovation and iteration will establish a long-term competitive advantage in this adjustment.
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