Consolidation Accelerates in Japan, Korea, and Europe
In 2025, the global petrochemical industry continued to face oversupply, driven by new facilities coming online in China and other regions. Large ethylene plants are scheduled to begin operations in China, the United States, and the Middle East in 2026. Who will survive this era of major consolidation?

1.China Continues to Launch Large-Scale Ethylene Facilities
China continues to expand chemical production, and while capacity for some products is already excessive, additional new ethylene facilities are planned to start up in 2026. Saudi Aramco and its subsidiary Saudi Basic Industries Corp. (SABIC) are expected to begin operations at their respective petrochemical complexes as early as 2026. Chinese capital is also active: PetroChina is planning to launch new ethylene capacity.

2.Japan, Korea, and Europe Undergo Production Restructuring
China's capacity expansion has had a significant impact on petrochemical producers around the world, prompting restructuring efforts to minimize the damage. In South Korea, 10 companies engaged in petrochemical operations have agreed with the government to consolidate production. By November, Hyundai Oilbank and Lotte Chemical had submitted applications to the government regarding restructuring in the Daesan area.

3.Global Strategies of Oil Majors
Aramco is expanding not only in China but also in South Korea, where S-Oil is scheduled to launch a large petrochemical complex in the latter half of 2026. Aramco invests in S-Oil. Meanwhile, SABIC has already been shutting down ethylene facilities in Europe. Other Western oil Majors are following similar strategies. Shell has sold its refining and petrochemical complex in Singapore, but it is expanding capacity at a joint-venture petrochemical site with CNOOC in China. ExxonMobil will halt one ethylene unit in Singapore as early as June, yet in 2025 it launched a wholly owned ethylene facility in Guangdong, China. Chevron Phillips Chemical sold its polyethylene facility in Singapore in 2025 and plans to start major new ethylene facilities in the US and Qatar in 2026.

4.Oversupply to Persist
Although Japan, Korea, and Europe are reducing capacity in 2026, operating rates are going to be raised at facilities that would not reduce capacity in 2026, and new capacity would begin operations. Therefore, supply/demand balance is unlikely to change significantly. Oil Majors are repositioning their production networks and are expected to increase sales from the US, China, and the Middle East to consuming regions.
Growing cross-border trade is putting pressure on the industrial structures of many countries. In Europe, INEOS requested the EU to invest 10 anti-dumping cases in November, warning that high energy costs and carbon regulations are eroding competitiveness. If low-priced imports from China and the US continue, Europe's industrial base could collapse, threatening employment, investment, and national sovereignty.
2026 is shaping up to be a pivotal year for the petrochemical industry, not only because supply and demand for petrochemical products will converge, but also due to several other key factors: trend in China, a major producer of end products; the competition for market share among global majors seeking optimal production; and how national industrial policies would treat position petrochemical products. Together, these elements will make 2026 a year that determines the future direction of the petrochemical sector.