Which US or China to lead; Europe and Asia are in between

In 2024, petrochemical makers suffered low business performance similar to the previous year. This was because new petrochemical facilities including ethylene facilities started up mainly in China and supply/demand loosened. A series of petrochemical facilities would start up in China In 2025 as well. Meanwhile, the US would strengthen its export capacity for ethane and ethylene. Europe and Asia in between the US and China need to take measures for this situation.

1.Investiment in petrochemicals continues in China

In China, major ethylene facilities plan to start up in 2025 as well. Besides state-owned companies including Sinopec and PetroChina, private companies Wanhua Chemical and US and European companies such as ExxonMobil and BASF are going to start up major petrochemical complexes with capacity of over 100 mil mt/year.

On the other hand, in China, some investment programs are reviewed. Saudi Basic Industries Corporation (SABIC) and Fujian Petrochemical Company (FPC) reached agreement in January 2024 to jointly construct a petrochemical complex including ethylene facilities in 2027. However, in October 2024, a joint venture consisting of Saudi Aramco, Sinopec and FPC held a groundbreaking ceremony for a petroleum complex that would integrates oil refineries and petrochemical facilities starting operations in 2030. SABIC is a 100%-owned subsidiary of Saudi Aramco. The start-up of the above complex might have been postponed and the plan might have been reviewed as a base of energy strategy of Saudi Aramco in China. Saudi Aramco refused to comment on the matter.

2.Structure reform in Europe and Asia, and rising exports from US

In Europe, a series of ethylene facilities were decided to be scrapped and closed down in 2024. Two facilities were scrapped in 2024 and another two would be scrapped. In Asia, Idemitsu Kosan decided to scrap a facility in Chiba. In West Japan, Mitsui Chemicals, Asahi Kasei and Mitsubishi Chemical are considering optimization of production structure including a reduction in capacity going forward. Moreover, Long Son Petrochemicals affiliated to SCG Group in Vietnam and JG Summit in the Philippines are suspending operations of their petrochemical complexes due to poor profitability.

On the other hand, the US is making good use of low-priced shale gas and is actively exporting ethylene and feedstock ethane. Enterprise Products, which offers services including crude oil and natural gas pipelines, plans to raise its ethylene export capacity by 2.00mil/year mt to 3.00 mil mt/year jointly with Navigator Gas, which conducts liquified gas vessels business. US President-elect Donald Trump stated to promote excavation of domestic crude oil and natural gas. This would cause supply of ethane to rise and ethylene makers are expected to able to procure feedstock ethane at low costs. Even if restructuring and operation adjustment is conducted in Europe and Asia, exports from the US would likely make up for the loss.