Everyone is saying the chemical industry’s inflection point has arrived—what is the logic behind this claim?

Global supply-demand rebalancing has begun. In November 2025, Huntsman’s 280,000-ton-per-year MDI plant in the Netherlands unexpectedly shut down. Coupled with low-load operations across multiple European facilities, global MDI supply tightened sharply. The following month, Wanhua Chemical, BASF, Dow, and Huntsman simultaneously raised prices for MDI and TDI—evidence of a severe overall supply shortfall driven by chronic energy shortages and aging infrastructure. Meanwhile, new capacity is accelerating its concentration in low-cost regions: in 2025, China accounted for over 70% of global PTA capacity and approximately 45% of PX capacity. From January to August, 60% of the 86 key monitored chemical products saw export volumes above the 80th percentile of their six-year historical range—reflecting China’s continuously strengthening role in the global supply chain. Domestic supply dynamics are shifting—from disorderly expansion to rational consolidation. Amid this wave of overseas shutdowns, China’s chemical industry has entered a new phase of optimizing existing capacity. In August 2025, seven ministries—including the Ministry of Industry and Information Technology—jointly issued the ‘Notice on Conducting Inventory and Assessment of Aging Facilities in the Petrochemical and Chemical Industry’ (MIIT-Linked Original [2025] No. 195), mandating evaluation of facilities operating beyond 20 years or past their design lifespan. This covers an estimated 15–18 million tons of capacity—18.3% of the industry’s total—with priority focus on MDI/TDI (where aging capacity accounts for ~25%), chlor-alkali, and synthetic ammonia. Chemical enterprises nationwide have already initiated assessments: Wanhua Chemical’s 400,000-ton-per-year aging MDI facility in Yantai entered evaluation, while its new 1.2-million-ton-per-year Ningbo base commenced operations—reducing unit production cost by ~12%. After four years of industry winter, consolidation effects are evident: according to National Bureau of Statistics data, fixed-asset investment in the chemical raw materials and chemical products manufacturing sector declined 7.9% year-on-year from January to October 2025; capital expenditure in the basic chemicals segment has posted negative growth for seven consecutive quarters. In 2026, virtually no new capacity is expected for bulk commodities such as PTA and styrene—the industry has officially entered an era of competition among existing assets. From late 2025 to early 2026, over 30 chemical enterprises across China conducted concentrated maintenance, affecting nearly 6 million tons/year of capacity. Polypropylene maintenance losses reached 7.42 million tons for the full year—setting a new record; PTA social inventory fell from 2.98 million tons in December 2025 to 2.08 million tons by mid-January 2026; Jinpu Titanium permanently shut down its 80,000-ton-per-year titanium dioxide capacity (50% of its total), primarily due to a 12% year-on-year decline in industry average prices in 2025 and persistent losses among high-cost producers. Prices and profitability have hit bottom; the inventory cycle inflection point is emerging. Multiple core indicators confirm the industry has reached a historical trough. As of December 31, 2025, the China Chemical Product Price Index (CCPI) stood at 3,927 points—39% below its 2021 peak and at the 23rd percentile of the past five years. Month-on-month, the PPI rose for the third consecutive month (+0.2%), while its year-on-year decline narrowed to 1.9%. De-stocking is nearing completion: overall industry inventory days dropped from 25 days at end-2024 to 18 days—a 28% reduction—and inventories of bulk commodities like PTA and MDI sit at historic lows. In the first three quarters, net profit attributable to shareholders in the basic chemicals sector rose 7.5% year-on-year (compared to 5.2% in the same period of 2024); ROE increased from 6.8% to 9.5%.

The collapse of the Jenga tower: Europe’s structural chemical industry breakdown—and will it continue to spread?

Although the Middle East conflict has temporarily eased competitive pressure from Asian producers, the resulting surge in raw material prices is severely damaging Europe’s already fragile chemical industry. Some analysts argue that even if the Middle East conflict ends quickly, Europe’s underlying problems remain—and the crisis will inevitably return. Regulatory burdens: The European Green Deal has become a driver of deindustrialization. The relationship between Europe’s chemical industry and EU climate policy is growing increasingly tense. Cefic—the European Chemical Industry Council—has been ranked by European chemical companies as the third-most influential lobbying group in Brussels. It ran subway advertisements in Brussels stations reading: ‘Feeling anxious? You should be.’ ‘Europe is losing production bases, high-quality jobs, and strategic autonomy.’ ‘Save our industry.’ At a conference in Antwerp, Covestro CEO Markus Steilemann directly urged European Commission President Ursula von der Leyen to ‘urgently reform the EU Emissions Trading System (EU ETS)—climate ambition must align with competitive realities.’ Julia Schrenk, Dow’s President for Europe, bluntly stated that the Carbon Border Adjustment Mechanism (CBAM) and the Green Deal have fallen into a trap of excessive procedural detail in their implementation. According to BASF’s report, in 2025 China contributed 7.0% to global chemical production growth, while the EU recorded a 2.1% decline. Analysis by EY-Parthenon notes that German chemical firms’ exports to China fell 10% in 2025, while imports from China rose nearly 6%. Jan Kühmel of EY stated plainly: ‘Chinese suppliers’ pricing is simply unmatchable by their German counterparts—that is the reality of competition.’ European chemical downstream demand is broadly weak. Exports of European chemical products continue to shrink: German chemical firms’ overseas sales declined 3% in 2025—down 21% cumulatively since 2022. Key downstream customers—especially Europe’s automotive industry—are themselves mired in deep crisis, with orders collapsing and thereby drastically compressing demand for chemical products. IV. One link breaks—entire chain wobbles. The Nobian chlorine plant in Rotterdam faces imminent cascading collapse. Chlorine is a critical raw material for producing plastics, pharmaceuticals, disinfectants, batteries, and countless other products. The Botlek area hosts a highly integrated chlorine value chain. Yet Westlake has halted operations at its epichlorohydrin unit, and Tronox has closed one factory—both significantly reducing downstream chlorine demand. According to Industry Links, falling chlorine demand forced Nobian to cut output, further weakening its competitive position and severely undermining its status as the Netherlands’ largest green hydrogen producer. The severity lies in Rotterdam’s pipeline network, which connects via pipe to Antwerp in Belgium—and extends further into Germany’s Rhine-Ruhr industrial heartland, home to vital sectors including automobile manufacturing. If Nobian is forced to close, shockwaves will radiate from Rotterdam to Antwerp and then across Germany’s industrial core. V. The UK crisis has already arrived. The UK is the vanguard of this crisis. Since 2021, UK chemical production has plunged by 60%. Today, the UK has completely ceased ammonia production. Only one aging, vulnerable chlorine plant remains—responsible for purifying 98% of the nation’s drinking water—alongside a single isolated ethylene unit still in operation.

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