The turning point has arrived.

The starting point of the previous cycle was in the first half of 2016, when polymer MDI prices plunged to RMB 9,850 per ton—across-the-board losses for the entire industry. By September 2017, prices peaked above RMB 40,000 per ton. The company’s attributable net profit surged from RMB 3.679 billion to RMB 11.135 billion. The second upswing occurred from late 2020 to March 2021: prices rocketed from RMB 10,750 to RMB 27,750 per ton—more than doubling in under a year—and profits hit an all-time high, still unmatched to this day. Two patterns recurred across both cycles: (1) each bottom coincided with industry-wide losses; and (2) each upturn was triggered by unexpected supply disruptions—China’s 2017 supply-side reform eliminating outdated capacity, and the 2021 Texas winter storm that forced overseas plants offline. Why must the bottom wait until universal losses occur? Because only when losses become unbearable do producers truly exit capacity. Applying these two benchmarks to today: current chemical prices have just begun rising off the bottom; the industry has barely crawled out of losses; and Europe’s permanent shutdowns have only just commenced—making the present situation more analogous to mid-2016. Second, structural changes on the cost side have already taken place. After ethane-based retrofitting, ethane costs have trended steadily downward: average Q2 price stood at USD 0.21 per gallon—a 15% YoY decline. This cost advantage is long-term and structural. Peers still rely on naphtha, placing their costs inherently higher than the company’s. The petrochemical segment’s gross margin recovered from last year’s negative figure to 6.80% in the first half—transforming from a loss-making segment into a profitable one. Third, the inflection point in capital expenditure. Cash paid for acquisition and construction of fixed assets totaled RMB 10.74 billion in the first half—down over 30% YoY from RMB 17.03 billion. For the same investment, last year cost RMB 1.00; this year it costs only RMB 0.63. Meanwhile, operating cash flow reached RMB 11.784 billion—exceeding capital expenditures. The first step in capacity rationalization is never price recovery—it is the collapse of investment intent. Before prices rebound, no one is willing to fund new capacity. Fourth, supply-side rationalization has already begun—and it is permanent. The bottom of the chemical cycle is never driven by demand recovery, but by supply attrition. Shut-down capacity does not automatically revive once prices recover. BASF, Covestro, and Huntsman plan to collectively shut down 700,000–1,100,000 tons of MDI capacity between 2026 and 2027. Given Europe’s total MDI capacity of 2.25–2.5 million tons, this represents roughly 30%. The company holds ~3.41 million tons of equity MDI capacity and commands over 30% global market share—making China’s industry leader the primary beneficiary of Europe’s retreat. Caveat: Covestro is simultaneously planning a new 660,000-ton facility in Shanghai, scheduled for commissioning around 2030. This is capacity relocation—not net disappearance. Every RMB 1,000-per-ton increase in MDI price adds approximately RMB 2.57 billion to the company’s net profit—this is where the highest leverage lies if this upcycle gains traction. Of course, at the bottom, chemical companies face not only tailwinds—but also significant headwinds. For instance, the company’s product prices were indeed strong in Q3—but part of this rally stemmed from seasonal maintenance: its 1.1-million-ton Yantai plant underwent a 45-day shutdown beginning August 10. Going forward, the key question is whether chemical prices can hold firm after capacity resumes operation.

Massive losses, layoffs, asset sales! How dire is the situation for global chemical giants in 2025?

Yet some companies are breaking through against the tide: BASF’s net profit rose 118% YoY; PPG maintained steady adjusted EPS; LG Chem’s operating profit surged 35%. Amid this industry-wide shakeout, who will survive the cycle—and who is swimming naked? Performance snapshot: Who’s losing money—and who’s profiting? Specialized Plastics Vision compiled 2025 financial data for major global chemical giants—presented in one table for full industry clarity: Note: ① LG Chem data reflects operating profit; all others report net profit; ② PPG data shows adjusted earnings per share (EPS); ③ Eurozone firms report in euros; others in US dollars. Loss epicenters: Who fell hardest? Dow Chemical’s full-year 2025 net sales totaled USD 40 billion, down 7% YoY; GAAP net loss reached USD 2.4 billion; operating EBITDA plummeted from USD 2.6 billion in 2024 to USD 0.4 billion—a drop exceeding 80%; operating cash flow fell from USD 2.9 billion to USD 1.1 billion—nearly halved. SABIC (Saudi Basic Industries Corporation) posted 2025 revenue of SAR 116.5 billion (~USD 31.1 billion), down 1% YoY—but reported a net loss of SAR 24.7 billion (~USD 6.6 billion). This massive loss stems not from operational deterioration, but from large-scale asset impairments. SABIC disclosed substantial write-downs on certain assets in its financial statements, alongside declining average selling prices for core products—both contributing to sharp profit erosion. However, its free cash flow reached SAR 7.2 billion, up 17% YoY—providing ample liquidity for future transformation. Covestro’s 2025 sales totaled EUR 12.942 billion, down 8.7% YoY; EBITDA stood at EUR 740 million, down 30.9% YoY; net loss widened to EUR 644 million—up from EUR 266 million in 2024. As the world’s leading polyurethane producer, Covestro is navigating a difficult transition. CEO Markus Steilemann stated the company is executing its ‘Winning with Purpose’ strategy—cutting costs and restructuring businesses to weather the industry downturn. Additionally, LyondellBasell reported 2025 sales of USD 30.153 billion, down 10% YoY; net loss of USD 738 million. In its earnings release, the company acknowledged that 2025 marked one of the longest downturns ever recorded in the chemical industry—global demand for polyethylene and polypropylene remains weak, especially amid persistently high inventory levels in the Chinese market, dragging down both prices and margins. Notably, LyondellBasell exceeded its 2025 cash improvement target—achieving USD 800 million (vs. original target of USD 600 million)—and raised its cumulative 2026 target to USD 1.3 billion. Even under extreme adversity, the company generated positive operating cash flow of USD 2.3 billion, with a cash conversion rate as high as 95%. Countercyclical breakthroughs: Who grew amid the freeze? Against the backdrop of widespread losses among global chemical giants, BASF delivered a relatively outstanding performance. In 2025, BASF’s sales totaled EUR 59.657 billion, down 3% YoY—but attributable net profit reached EUR 1.313 billion, surging 118% YoY—more than doubling from EUR 602 million in 2024.

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