When the Chemical Industry Is No Longer Highly Profitable: Sinochem International’s 2.4 Billion Yuan Loss Reveals the Truth About Industry Cycles

2.4 billion yuan—this could be Sinochem International’s largest annual loss in 2025. Even with full-capacity operations, rising sales, and simultaneous mergers and capacity expansions, the company is still unable to stop losses from widening.

At first glance, this loss might seem like another setback for a chemical industry leader in a cyclical downturn. But when viewed over a longer timeline and broken down by business segments, it reads more like an industry health report—it signals not just the challenges of a single company, but the systematic breakdown of the chemical industry’s “high-profit logic.”

Sinochem International Is Experiencing “Continuous Bleeding”

Financial data show that the company’s pressures are not confined to a single extreme year—they have persisted for several consecutive years.

Over the past three years, Sinochem International’s revenue has remained around the 50 billion yuan level, without a sharp decline. Yet net profit has consistently been negative, and losses have at times expanded. In 2025, the company expects net profit attributable to shareholders of the listed company to be between -1.929 billion and -2.411 billion yuan. Compared with the previous year, the reduction in losses ranges from 15% to 32%. After excluding non-recurring gains and losses, net profit is expected to be between -1.837 billion and -2.3 billion yuan, with a reduction in losses of 38% to 51%.

This data highlights a key issue: Sinochem International is not “unable to sell,” but rather “the more it sells, the less profit it earns.” This phenomenon is not uncommon in today’s chemical industry.

Busy on the Surface vs. Ineffective in Reality: The Chemical Profit Model Is Collapsing

In 2025, sales of Sinochem International’s basic raw materials and intermediates increased significantly, with revenue up about 30–35% year-on-year. Production facilities operated at higher utilization rates, and the company pushed forward mergers and integrations to stabilize its base. Yet losses continued. The reason is simple: prices are falling faster than sales are growing.

In 2025, prices for key products like propylene oxide, anti-aging agents, phenol ketone, bisphenol A, nylon 66, and aramid generally came under pressure. Supply has expanded rapidly in recent years, while demand recovery lags expectations, creating structural oversupply in many segments. In a highly commoditized market, price becomes the only adjustment variable, rapidly eroding profit margins.

Market Price Trends for Selected Chemicals in China (2024–2026, yuan/ton)

From early 2024 to January 2026, prices for anti-aging agents and nylon 66 plunged: nylon 66 dropped from ~22,500 yuan/ton to ~14,000 yuan/ton, and anti-aging agents fell from 25,000 yuan/ton to 15,000 yuan/ton. Though the declines for bisphenol A and propylene oxide were less extreme, the downward trend was still evident.

Sinochem International’s challenges reflect the broader industry. The Crisis Is Structural, Not Just Cyclical

For the past two decades, the chemical industry’s core competitive logic was “grow fast, keep costs low.” That logic is failing today.

Supply expansion is no longer sporadic; it is consolidated and group-driven.

Downstream demand growth has slowed, and exports no longer serve as a buffer. Propylene resin products face anti-dumping measures and technical trade barriers overseas, making exports more costly and difficult. Domestic overcapacity cannot be efficiently absorbed.

Even industry leaders cannot escape. Sinochem International’s losses are an early manifestation of structural adjustments becoming visible at the top.

The Real Divide: Not “Profitable or Not,” but “Which Businesses Are Worth Investing In”

Looking at Sinochem International’s own structure, the key question is no longer “can the company return to overall profitability?” but rather—which product lines are systematically failing, and which still hold structural value?

Basic raw materials & commodity intermediates: low technical barriers, high commoditization, prices dictated entirely by market supply and demand. In oversupply phases, scale magnifies losses rather than advantages. The focus should be on cash preservation and scaling back production.

General-purpose epoxy resins: Through the acquisition of Nantong Xingchen, Sinochem International aims to have the largest domestic capacity, but the industry’s average utilization remains low. Capacity leadership does not equal pricing power; these products serve mainly as “cash flow generators.”

High-tech and specialty segments: high-end epoxy and specialty resins for wind power, electronics, and composites benefit from high entry barriers, long customer approval cycles, and lower price volatility. Products like aramid maintain technical moats, policy support, and long-term demand, making them strategic assets for navigating cycles.

Defensive businesses: polymer additives, nylon 66, etc., may grow slowly but provide stable cash flow and customer stickiness, suitable for low-cycle stability.

Divestitures: Li-ion materials and membrane businesses, like Huai’an Junsheng and Ningxia Sinochem, demonstrate strategic prudence, as fast-changing technology paths, high capital consumption, and trial-and-error costs make them unsuitable for a large traditional chemical group.

Sinochem International’s 2.4 Billion Yuan Loss Highlights Three Fundamental Changes in the Chemical Industry

Scale no longer guarantees safety: Without pricing power, scale magnifies cyclical swings rather than profits.High utilization is not a cure: When prices continuously fall, full-capacity operations are a stopgap measure, not a solution.Active contraction is a healthy signal: Strategic focus reflects a transition from the industry’s expansion phase to a mature phase, where value assessment shifts from scale to efficiency.

Sinochem International’s Industry Warning

When chemicals are no longer highly profitable, the challenge is not “how to restore profits,” but rather deciding which businesses to continue investing in and which to accept as casualties of the cycle. This is the core issue behind the company’s projected 2.4 billion yuan loss in 2025, and the reality that the chemical industry as a whole must now confront.