A large number of Asian chemical feedstock and polymer plants may shut down this year due to slowing economic growth. The petrochemical industry realizes that demand will not increase significantly in the near future to compensate for low profits, ICIS vice president of chemical analytics Alex Lidback said at the Asia Petrochemical Industry Conference (APIC) in Seoul.
“The profitability of most materials is declining. It is very difficult to grow with overcapacity, which in recent years, especially in China, has caused the current market downturn. The Asian market currently has excess capacity in ethylene, propylene, ethylene glycol, paraxylene and styrene, which are all raw materials for polymers. The excess capacity is unprecedented. Unless there are large-scale shutdowns, the market will not rebalance most products anytime soon,” says Alex Lidbak.
The expert added that, unlike previous supply-demand cycles, China can no longer absorb the world’s excess capacity. Imports of basic polymers in this country from 2020 to 2023 decreased by almost 12 million tons.
According to Lidbak, the industry will have to make a number of difficult decisions to restore its balance sheet, including permanently closing plants, delaying and even canceling projects. He added that while low-cost assets in the Middle East and North America are safe, higher-cost polymer producers are vulnerable in other regions.