On the Eve of a New Major Chemical Industry Cycle!

Because downstream demand is expanding in tandem, product prices are rising accordingly, and gross margins are widening. As oil prices retreat from highs and settle into a relatively stable range, this precisely frees up profit space for mid- and downstream players. This is exactly the current situation: Although crude oil has recently declined, the gross margins of products from major domestic integrated refining & petrochemical projects have not shrunk—in fact, they have risen by over 11% quarter-on-quarter. Acrylonitrile gross margin surged by RMB 1,600 per ton in one week; MMA gross margin rose by more than RMB 700 per ton. Underpinning this is proactive supply-side contraction: Short-term plant shutdowns and tight spot market liquidity have kept prices resilient despite falling input costs. Looking at industry price data: The PTA processing margin has recently climbed to RMB 466 per ton. Moving further downstream, spandex demand grew 16% year-on-year in the first half of the year, with its gross margin rising sequentially each quarter. The quarterly contract price for refrigerant R32 jumped from RMB 60,000 to RMB 65,000 per ton in Q3, reflecting extremely strong pricing power among producers. Among polyester-chain products most widely discussed—polyester filament yarn—the inventory of grey fabric and finished fabric across upstream and downstream links stands twenty to thirty days lower than usual for this time of year. Insufficient accumulation during the off-season means that once peak-season demand kicks in, there will be substantial upside elasticity. Chemical product profitability is preparing for a fresh takeoff. The second genuine pillar supporting the logic of a major cycle is a globally synchronized, epic-scale supply-side cleanup. And after this cleanup, the vast majority of surviving capacity will reside in China. First, overseas. From 2022 to 2025, Europe permanently shut down a cumulative 37 million tons of chemical capacity—equivalent to 9% of its regional total capacity—six times faster than the historical norm. Steam cracker units—the upstream “cash printers” of the chemical industry—saw their capacity slashed by 16% outright. Europe’s chemical industry capital expenditure plummeted to just €150 million in 2025, down 81% from 2022. Dow closed three core facilities in Germany and the UK; Shell permanently shuttered two large steam crackers in the Netherlands and the UK; TotalEnergies plans to permanently close its Belgian cracker by 2027; and SABIC even sold its entire European petrochemical business as a package. These moves differ fundamentally from cyclical maintenance or production cuts—each represents a permanent shutdown. Equipment is dismantled and will never restart. Japan and South Korea are likewise retrenching. South Korea’s YNCC permanently shut down two steam crackers in Yeosu, slashing its ethylene output by 60%; Lotte’s DaeSan cracker is scheduled for a three-year suspension, involving 1.1 million tons of ethylene capacity. Japan’s three major chemical firms—Mitsui Chemicals, Asahi Kasei, and Mitsubishi Chemical—are merging their western-Japan ethylene assets, proactively downsizing under high-cost pressure. Even ExxonMobil permanently closed its decades-old steam cracker in Singapore in June this year. A common backdrop unites these shutdowns: Ethylene production costs in Europe hover around USD 885 per ton; in Japan and Korea, USD 800–850; whereas U.S. and Middle Eastern ethane-based crackers operate at only USD 200–350 per ton—and China’s new generation of integrated refining & petrochemical facilities boast cost structures significantly lower than those in Europe and Japan/Korea. The high oil prices triggered by the U.S.–Iran conflict were the final straw that broke them—and once oil prices receded, China’s low-cost capacity pushed prices down to levels where their cash flows became unsustainable. Shutting down simply made more economic sense—so they chose to concede and exit.

Global Chemical Industry ‘Shutdown Wave’ Spreading—Accelerating Noticeably in 2026

It’s been less than half a year since 2026 began—do you know how many chemical plants worldwide have already been shut down? Mounting evidence indicates that the pace of global chemical industry capacity elimination is clearly accelerating in 2026. In the past, the most common form of capacity reduction involved short-term load reductions, planned or unplanned maintenance shutdowns; permanent shutdowns remained a relatively rare term. But over the past two years, permanent shutdowns, project cancellations, asset sales, industrial chain integration, and bankruptcy restructurings have become commonplace. This signals that the global chemical industry—having just emerged from an industry trough—is now entering a deeper phase of asset restructuring. Companies are no longer passively waiting for the cycle to rebound; instead, they’re proactively cutting costs, improving efficiency, and divesting non-performing assets. I. Europe remains the epicenter of the shutdown wave. In January 2026, ExxonMobil announced the permanent shutdown of its Fife ethylene plant in the UK—a facility operating for over 40 years. This marks a symbolic event in Europe’s ethylene capacity contraction, reflecting how aging, inefficient, small-scale ethylene units are crumbling amid brutal global competition. Also in January 2026, SABIC announced the sale of its European petrochemical business and its Americas/Europe engineering thermoplastics business, totaling approximately USD 950 million. The European petrochemical business was sold to AEQUITA; the engineering thermoplastics business went to Mutares. In May 2026, LyondellBasell sold part of its European olefins and polyolefins assets to AEQUITA. In September 2025, Solvay announced restructuring at its Bad Wimpfen (Germany) site: TFA and related derivative production will cease in early 2026, and parts of its inorganic operations—including hydrogen fluoride (HF)—will gradually wind down by end-2026. II. Asia’s capacity reduction leans more toward integrative consolidation. In January 2026, Asahi Kasei, Mitsui Chemicals, and Mitsubishi Chemical signed an agreement to integrate their western-Japan ethylene assets—phasing out Mitsubishi Chemical’s Asahi-Kasei Mizushima ethylene unit and concentrating production at Osaka Petrochemical’s facilities. In May, Asahi Kasei announced downstream derivative restructuring aligned with the Mizushima integration, covering styrene monomer, LDPE, HDPE, acrylonitrile, and polycarbonate diol. In February, the South Korean government approved the restructuring plan for HD Hyundai and Lotte’s DaeSan complex, whereby Lotte’s DaeSan business will be spun off and merged into HD Hyundai; Lotte’s DaeSan NCC is slated for a three-year temporary suspension, affecting 1.1 million tons/year of ethylene capacity. On March 6, YNCC submitted its restructuring plan to the Korean government, deciding to permanently close its No. 2 and No. 3 naphtha cracking units in Yeosu—annual capacities of 900,000 and 500,000 tons respectively—cutting YNCC’s ethylene output by 60%. The Korean government is also reviewing YNCC’s proposed integration with Lotte’s Yeosu NCC, potentially incorporating downstream PE assets into the new entity. In March 2026, ExxonMobil announced it expects to permanently close its steam cracker on Jurong Island, Singapore, in June. III. New materials and lithium battery materials sectors are also undergoing capacity rationalization. In February 2026, Albemarle announced the suspension of operations at its Kemerton (Australia) lithium hydroxide processing plant, placing related facilities into maintenance status. Also in February 2026, Imerys announced the suspension of active development of its British Lithium project in the UK, redirecting resources toward its Emili project in France.

European Petrochemical Industry Continues Deep Restructuring

22 hours ago

LyondellBasell, SABIC, and BP sell over 10.5 million tons of European petrochemical capacity to Aequita and Ineos amid high energy costs, marking a strategic exit of integrated majors from the region's basic chemical sector.

ccin

2026-09-30

European Petrochemical Industry Continues Deep Restructuring

European Petrochemical Industry Continues Deep Restructuring

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