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S&p global: Asian Olefins Oversupply May Persist

Zhonghua Chemical Network 2025-09-18 13:54:48

Recently, at the 2025 Asia Pacific Petroleum Conference (APPEC) held in Singapore, analysts from S&P Global stated that the oversupply situation in the Asian olefins market may take 3 to 4 years to alleviate, and investment in new production capacity is also slowing down.

Paul Joo, Director of Olefins and Derivatives at S&P Global Commodity Insights, stated that olefin margins in Asia have been consistently negative in recent years, mainly due to the addition of over 10 million tons per year of ethylene capacity in Northeast Asia between 2024 and 2025, leading to the shutdown of multiple steam cracking units. Joo noted: "After years of challenges, the chemical industry has seen a glimmer of hope, but olefin margins in Asia may only turn positive after 2030."

Previous reports indicate that at least three naphtha cracking units in Japan are scheduled to be retired by 2028, which is expected to reduce Japan's ethylene production capacity by approximately 20%. Meanwhile, South Korea is advancing the restructuring of its cracking industry, with the government requiring operators to submit information about their units and advising a reduction in ethylene capacity by 2.7 to 3.7 million tons per year. According to S&P data, on September 10, the price of ethylene in Northeast Asia remained stable at $840 per ton, while the price of Japanese naphtha increased by $6 per ton to $603.25 per ton. The price difference between ethylene and naphtha was $236.75 per ton, which is below the breakeven point level of $250 per ton for integrated producers and $300 to $350 per ton for non-integrated producers.

Joo predicts that from 2020 to 2028, an estimated 6.5 million tons per year of global ethylene capacity will be shut down. Additionally, due to the cost advantage of ethane, Asian cracking units are considering shifting from naphtha to ethane cracking. Joo revealed that from 2025 to 2027, Asia and Europe will have four ethane cracking units come online, with a total capacity of 4.15 million tons per year. He also stated that the supply of ethane in the United States may peak around 2035 and then slow down, while global ethane demand will continue to grow.

Andrew Neale, Vice President of Chemicals and Materials at S&P Global Commodity Insights, stated that industry consolidation and efficiency improvements in response to global overcapacity in cracking will accelerate in high-cost regions between 2026 and 2027. Although 4 million tons of cracking capacity has recently been shut down and another 1 million tons is at risk, Neale believes that unless more than 20 plants are closed, it will be difficult to significantly change the global supply landscape. While there has been an increase in the shutdown of cracking facilities in Europe, international giants will continue to expand their olefin supply through the U.S. and the Middle East, resulting in limited reductions in global capacity.

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S&p global: Asian Olefins Oversupply May Persist

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