Global Chemical Market Transformation in 2024: Key Developments and Future Outlook

The global chemical market underwent significant changes in 2024. China's exports of bulk chemicals saw an increase, while imports declined. Conversely, Europe experienced a rise in chemical imports but a decrease in exports. Despite a general slump in profits across the global chemical industry, high-end chemicals maintained stable profit margins. Looking ahead to 2025, while challenges such as overcapacity and international trade barriers persist, the overall momentum remains positive, with rapid capacity increases and ongoing shifts in global trade dynamics.

Global Capacity Expansion Slows, Aging Capacity Retires

In 2024, the pace of global chemical capacity expansion slowed, with approximately 22 million tons/year of new capacity added, nearly a 100% reduction compared to 2023. The past two years of new capacity in Northeast Asia have intensified the retirement of aging facilities overseas. Major companies, such as Mitsui (Japan), Taiyo (Japan), and LG (South Korea), have shut down multiple chemical plants, affecting products like ethylene, styrene, and PTA, with a total capacity exceeding 4 million tons/year. Notably, ExxonMobil and SABIC announced the permanent closure of their ethylene cracking facilities in France and the Netherlands, with capacities of 425,000 tons/year and 530,000 tons/year, respectively.

Moderate Economic Recovery Fuels Demand for Petrochemicals

The global economy demonstrated resilience in 2024, with expectations of 3.2% growth, slightly higher than 2023's 3.1%. This recovery supported a positive trend in chemical product demand, with global ethylene consumption increasing by 2.5% and para-xylene consumption by 4.4%. However, Northeast Asia’s naphtha market faced challenges, as the ethylene-naphtha price spread fell below $200/ton, affecting operational loads in the region.

Shifting Capacity and Trade Flows

Geopolitical conflicts have significantly altered trade flows in the global chemical market. Europe saw increased imports and decreased exports due to these tensions and the retirement of outdated facilities. In contrast, China’s export volume for products like ammonium sulfate, PTA, and polyethylene reached 35.1 million tons in 2024, marking a 20.4% increase from the previous year.

Despite the global oil demand not yet recovering to pre-pandemic levels, chemical product demand has continued to rise, with global synthetic resin consumption projected at 270 million tons in 2024 and expected to grow to 283 million tons in 2025.

Significant Profit Disparities Amidst Low Carbon Transition Challenges

The global chemical industry has faced prolonged profit difficulties, with U.S. ethane-based ethylene profits falling from $450/ton in 2021 to around $300/ton in 2023. Nevertheless, some high-end products, such as polyolefin elastomers, maintain profit margins between 20% and 40%.

Carbon emission trading prices, notably in Europe, have impacted costs, with prices reaching $82/ton in 2023, adding approximately $10 to $15 to production costs.

Competitive Landscape and Rising Trade Barriers

The international chemical trade market has experienced long-term price inversions for certain products. For instance, thermoplastic styrene-butadiene rubber (SBS) faced challenges of overcapacity and pricing inversions. The competition has intensified, particularly due to Middle Eastern and U.S. producers leveraging their resource advantages and aggressive pricing strategies. Trade barriers, including tariffs on Chinese resin products in countries like Indonesia and Turkey, have further complicated export efforts.

2025 Outlook: Steady Progress Amid Challenges

As the global petrochemical industry prepares for a new round of capacity expansion in 2025, a substantial 29.86 million tons/year of new capacity is expected to be added, primarily driven by China. The anticipated total global ethylene capacity will rise to 240 million tons/year.

However, with the new capacity release, average operating rates are expected to decline by 0.7 percentage points to around 80%. The significant growth in supply could lead to further strain on prices and profitability, particularly as the industry adjusts to these changes.

Strategic Directions for Chinese Chemical Enterprises

In light of ongoing challenges, Chinese chemical companies must focus on upgrading their industrial capacities and expanding into international markets. Key strategies include enhancing product quality, increasing the ratio of high-value products, and effectively leveraging lower-cost raw materials.

Additionally, companies should work towards sustainability through the adoption of green technologies and innovative practices to ensure a competitive edge in the evolving global landscape.