Review of the global chemical market in 2024 and outlook for 2025: changes and challenges coexist

In 2024, the global chemical market experienced a profound change. This year, the export volume of China's bulk chemicals increased significantly, while the import volume decreased, in sharp contrast to the trend of the European market. Imports of chemical products in Europe increased and exports decreased accordingly. Despite the general downturn in global chemical industry profits, the high-end chemicals sector has maintained stable profit margins.

Capacity Adjustment and Market Change

in 2024, the pace of capacity expansion of global chemical products slowed down significantly, with new production capacity of basic chemical raw materials of about 22 million tons/year, a decrease of nearly 10% compared to 2023. However, the new capacity in Northeast Asia has had an impact on the global market, promoting the accelerated elimination of old chemical plants overseas. Many well-known companies such as Japan's Mitsui, Taiyo and South Korea's LG have successively shut down chemical plants for ethylene, styrene, PTA, polypropylene and other products, with a total production capacity of more than 4 million tons/year. In addition, ExxonMobil and Shabik have also decided to permanently close their ethylene crackers in France and the Netherlands.

Global Economic Recovery and Chemical Demand

the global economy showed a moderate recovery in 2024, with price indices in major economies continuing to decline, inflationary pressures easing and monetary policy entering a cycle of interest rate cuts. This trend will help the global economy achieve a "soft landing". The economic growth rate is expected to reach 3.2 per cent for the whole year, slightly higher than the 3.1 per cent in 2023. In this context, the global demand for chemical products has gradually recovered, and the consumption of ethylene, PX, synthetic resin, synthetic fiber and synthetic rubber has increased. However, naphtha cracking spreads in Northeast Asia continued to be depressed, resulting in a large number of cracking units not operating properly, the operating load fell to about 83%.

Trade Flows and Capacity Patterns

geopolitical conflicts have had a profound impact on trade flows in the global chemical market. The import volume of European chemicals has increased and the export volume has decreased, while the import and export pattern of Chinese chemical products is also changing. In 2024, China's total exports of ammonium sulfate, PTA, polyester, polypropylene and polyethylene increased by 20.4 to 35.1 million tons. According to the International Energy Agency, while global oil demand has not yet returned to pre-epidemic levels, demand for chemicals is on the rise. As the world's largest demand for synthetic resin, China's consumption will reach 0.12 billion tons in 2024. In addition, China's refining and ethylene capacity has surpassed the United States to become the world's largest.

Profit Disparities and Low Carbon Transition

profits in the global chemical industry have been in the doldrums for a long time, but the profit margins of high-end chemicals such as polyolefin elastomers and polyvinyl alcohol remain high. However, the fluctuation of carbon emission trading price has an impact on the cost and profit of chemical products, which makes the global chemical industry face greater pressure of low-carbon transition. In Europe, the high price of carbon emissions has increased the production costs of enterprises and further reduced profit margins.

Market Competition and Trade Barriers

the international chemical trade market is highly competitive, and some products have long-term price inversion. For example, thermoplastic styrene-butadiene rubber is facing the double challenge of overcapacity and upside down prices inside and outside the market. In addition, resource-rich countries such as the Middle East and the United States have taken advantage of raw material cost advantages and advanced chemical technology to adopt aggressive pricing strategies, which has intensified market competition. China's chemical products face a series of trade barriers in the international market, such as Indonesia and Turkey and other countries impose high import tariffs on China's polypropylene and polyolefin products, and the European Union imposes anti-dumping duties on China's polyvinyl alcohol. These measures have seriously affected the export of China's chemical products.

Market Outlook in 2025

looking forward to 2025, the global petrochemical industry will usher in a new round of production peaks, and the new production capacity is expected to reach 29.86 million tons/year, a year-on-year increase of 35%. China's new capacity will account for more than 60% of the world's total. However, with the rise of new energy and the long-term downward trend of global oil demand, the chemical industry is facing the risk of overcapacity. It is predicted that by 2025, the global production capacity of ethylene, propylene and butadiene will reach 0.238 billion tons/year, 0.181 billion tons/year and 18.94 million tons/year respectively, and China's "triene" production capacity will also rank among the top in the world.

In terms of regional economic performance, the US economy is expected to usher in steady growth, and emerging economies such as Southeast Asia will also release economic growth and trade potential. With the adjustment of monetary policy and the easing of inflationary pressures, global consumption of petrochemical products is expected to be positively driven. It is estimated that the global consumption of synthetic resin, synthetic fiber and synthetic rubber will increase to about 0.3 billion tons, 86 million tons and 10.6 million tons respectively in 2025.

In terms of trade pattern, the global trade flow of petrochemical products will continue to adjust. The strengthening of trade tariff barriers in Europe and the United States will bring greater pressure on China's export market to the United States, while emerging economies such as ASEAN will become new growth points. Europe's long-term shortage of petrochemical products has created market space for the United States and the Middle East to export to Europe.

Coping Strategies of Chinese Chemical Enterprises

in the face of changes and challenges in the global chemical market, Chinese chemical companies should accelerate industrial upgrading and transformation and upgrading, and increase the proportion of high value-added products. By increasing capital, resources and technology investment, occupy the dominant position in the global high-end market. At the same time, actively explore the international market, find new customer resources, and increase the export volume of chemical intermediates, synthetic materials and other products. In addition, efforts should be made to promote the development of green chemical technology, improve energy efficiency and reduce operating costs. In terms of internationalization strategy, it is necessary to strengthen the research on internationalization management strategy and the research on the global bulk product trade chain to enhance the influence of the global market.

To sum up, the global chemical market has experienced profound changes and challenges in 2024, but looking forward to the future, with the rise of emerging markets and the recovery of the global economy, the chemical industry still has broad prospects for development. Chinese chemical enterprises should seize the opportunity, actively respond to the challenges and promote the high-quality development of the industry.