Current status of the global chemical market
The global chemical market in 2024 has undergone significant changes, with various key data reflecting a reshaping of the market structure and associated challenges.
Slower Capacity Expansion and Retirement of Old Capacities:
In 2024, global capacity expansion for basic chemical raw materials increased by approximately 22 million tons per year, a near 100% reduction compared to 2023. However, due to overcapacity in Northeast Asia in recent years, several countries and companies, including Japan’s Mitsui, South Korea’s LG, and ExxonMobil, closed outdated chemical plants, with a total capacity of over 4 million tons per year.
In 2024, ExxonMobil and Sabic decided to permanently shut down their ethylene cracking plants in France (425,000 tons per year) and the Netherlands (530,000 tons per year), further driving the global chemical industry’s capacity restructuring.
Moderate Global Economic Recovery and Increased Petrochemical Demand:
The global economy grew by 3.2% in 2024, slightly higher than the 3.1% growth in 2023. This recovery has supported the rise in demand for petrochemical products, with global consumption of major petrochemical products increasing. For example:
Ethylene consumption increased by 2.5% year-on-year.
Para-xylene (PX) consumption grew by 4.4% year-on-year.
Synthetic resin consumption increased by 2.6% year-on-year.
Synthetic fiber consumption rose by 4.5% year-on-year.
Synthetic rubber consumption grew by 2.8% year-on-year.
However, the naphtha cracker market in Northeast Asia remains under pressure, with cracker operating rates dropping to around 83%, and the ethylene-naphtha cracking margin falling below $200 per ton, resulting in weak demand for downstream olefins products.
Increase in Chemical Exports from China:
China’s chemical exports surged in 2024, especially for bulk chemicals like ammonium sulfate, PTA, polyester, polypropylene, and polyethylene. The total export volume reached 35.1 million tons, a 20.4% increase from the previous year.
China continued to dominate the global synthetic resin market, with its consumption in 2024 reaching 120 million tons. The global total consumption of synthetic resin in 2024 was approximately 270 million tons, and this number is expected to grow to 283 million tons by 2025.
Petrochemical Industry Capacity and Market Trends:
In 2025, global capacity for basic petrochemical raw materials is expected to increase by 29.86 million tons per year, a 35% year-on-year increase. China will account for over 60% of the additional capacity, with 18.3 million tons per year.
Global ethylene capacity is expected to grow to 240 million tons per year by 2025, and PX capacity will increase to 80.68 million tons per year. Despite this, the global operating rates for ethylene and PX are expected to decline slightly, to around 80% and 77%, respectively.
Challenges in Low-carbon Transition and Green Chemical Technology:
The global chemical industry faces significant pressure to transition to low-carbon operations. In some European regions, the carbon emission price reached $82 per ton in 2023, increasing the production cost of chemicals by $10 to $15 per ton.
In response to this carbon emission and energy cost pressure, the global chemical industry is increasingly turning to green chemical technologies to improve energy efficiency and reduce emissions.
Trade Barriers and Intense Market Competition:
The international chemical trade market is becoming increasingly competitive. In 2024, thermoplastic styrene-butadiene rubber (SBS) faced dual challenges of overcapacity and a price inversion between domestic and foreign markets, with foreign prices averaging $1120 per ton higher than domestic prices.
Trade barriers have also impacted China’s chemical exports. For instance, India imposed anti-dumping duties on Chinese aniline products, ranging from $36.90 to $121.79 per ton, preventing smooth exports of Chinese chemicals.
Petrochemical Capacity and Market Outlook for 2025:
By 2025, the global capacity for six major basic organic raw materials (ethylene, propylene, butadiene, benzene, toluene, and xylene) is expected to exceed demand by 21 million tons. This will intensify overcapacity issues, with China maintaining the largest global share in the production of ethylene, propylene, and butadiene.
Globally, the chemical industry faces overcapacity combined with economic slowdown, resulting in reduced plant operating rates, compressed profit margins, and delayed new plant start-ups.
Global Petrochemical Trade Pattern Adjustment:
The global trade growth is expected to recover to around 3.2% by 2025, following a slowdown in previous years. However, international trade disputes will persist, and petrochemical trade flows will continue to adjust. With declining demand in Europe and the U.S., more petrochemical products are expected to shift towards emerging markets in Southeast Asia, the Middle East, and Africa.
China’s chemical companies need to focus on upgrading their industrial capacity and international strategy, optimizing industrial structures, and increasing the proportion of high-value-added products. They should also enhance cooperation with countries in the Belt and Road Initiative and RCEP to expand market reach and improve pricing power in the global market. By focusing on smart, green chemical technologies and improving operational efficiency, China can strengthen its competitiveness in the global chemical market.
Overall, despite the numerous challenges, the global chemical market is expected to enter a new growth cycle by 2025, with continued expansion in capacity and new market opportunities emerging.