900,000 tons of ethylene production officially shut down! ExxonMobil cuts 1.73 million tons in six months—reshaping the Asia-Pacific petrochemical landscape

But contraction is never a one-way street. While scaling back, ExxonMobil is simultaneously executing a major expansion across the Asia-Pacific region. Doubling down on China! Why invest $10 billion in Huizhou? On July 15, 2025, ExxonMobil’s Huizhou ethylene project officially commenced operations in Dayawan, Huizhou City, Guangdong Province—the first major petrochemical project wholly owned and built by a U.S. company in China, with a total investment exceeding $10 billion. In stark contrast to the aging facilities being shut down in Singapore, the Huizhou project operates on an entirely different scale and strategic footing— Key metrics for Phase I of ExxonMobil’s Huizhou Ethylene Project Notably, the Huizhou project is not just another large-scale steam cracker—it targets the high-end, differentiated product market: its LDPE unit is dubbed the “world’s largest single-train LDPE facility”; its polypropylene production line focuses on “differentiated, high-performance grades”; and it includes R&D capabilities tailored specifically for the Asia-Pacific market. This stands in sharp contrast to the aging Singaporean facilities—designed primarily to supply basic ethylene feedstock. An industry analyst captured this dichotomy precisely: “China offers lower construction costs, a complete industrial chain, strong policy support, and proximity to end-consumer markets—there is simply no more cost-competitive location in the Asia-Pacific for new-build projects.” Plant shutdowns of aging assets are not exclusive to ExxonMobil. ExxonMobil’s Singapore shutdown reflects a broader industry trend: aging capacity at the tail end of the cost curve is undergoing systemic elimination amid dual pressures of overcapacity and losses. Take Dow Chemical as an example: In 2025, its net sales totaled $39.968 billion—a 7% year-on-year decline—and it posted a full-year net loss of $2.444 billion. Saudi Basic Industries Corporation (SABIC) has already shuttered its 865,000-ton-per-year ethylene cracker in the UK; South Korea’s Yichuan NCC announced indefinite suspension of its 470,000-ton-per-year cracker. Industry estimates suggest South Korea plans further reductions of 2.7–3.7 million tons/year in naphtha-based cracking capacity. Meanwhile, Japanese petrochemical firms face similar headwinds—Q1 2026 saw nearly 1.75 million tons/year of cracking capacity idled due to both Middle East–driven naphtha supply disruptions and retirement of obsolete units. This is not merely one company’s struggle—it is a global, systemic phaseout of the naphtha route, squeezed from multiple directions: ethane-based, coal-based, and newly integrated facilities. Implications for plastics & polymers professionals ExxonMobil characterizes this shutdown as “part of its global asset optimization strategy, focusing on core assets with superior competitive advantages.” What it is building in Huizhou, China, is precisely the prototype of the next-generation “core asset”—larger in scale, higher in product sophistication, stronger in supporting R&D capability, and more competitive in construction cost. For participants along China’s plastics value chain, understanding this migration in the definition of “core assets” will help anticipate future trends in raw material procurement and technology collaboration. Whether it’s the cessation of operations at the old Singapore plant or the Huizhou facility’s strategic focus on high-performance polyolefin grades, the message is unequivocal: price competition in commodity-grade materials has devolved into a pure cost war, while premiumization and differentiation represent the structural path forward.

Global chemical industries are all suffering from overcapacity—so why are product prices still surging?

When raw material prices rise, if downstream products cannot raise prices in tandem, processing margins shrink; as losses widen, downstream producers cut output; reduced output, in turn, lowers demand for upstream raw materials—eventually pushing inventories back upward. This negative feedback loop has already taken hold. According to Longzhong Information monitoring data, polyester sector output and capacity utilization declined in August—largely due to tight raw material supply and excessive cost increases. Except for filament yarn, losses intensified across other polyester products; bottle-grade PET and staple fiber producers responded by cutting output to restore processing margins. The methanol value chain faces the same challenge. Rising methanol prices significantly increase feedstock costs for methanol-to-olefins (MTO) plants. If downstream products such as polyethylene and polypropylene fail to raise prices correspondingly, MTO profitability comes under pressure—forcing operators to reduce operating rates. The feedback chain for supply-driven price hikes runs as follows: supply constraints push up raw material prices → rising raw material costs compress downstream margins → downstream output cuts reduce demand → raw material inventories rise. Once this negative feedback takes hold, the upward momentum behind price increases gradually weakens—and ultimately dissipates. The traditional ‘Golden September–Silver October’ seasonality does not guarantee that the price uptrend will persist. Beyond September and October, what truly matters is whether terminal order volumes and downstream profitability improve. If downstream operating rates rebound, it signals sustained demand for high-priced raw materials—potentially shifting this round of market dynamics from supply-driven to demand-supply resonance. Conversely, if downstream operating rates continue falling after raw material prices rise, then high raw material costs become the greatest downside pressure on the market. Thus, what currently determines the trajectory of this chemical market cycle is not how much further crude oil prices may climb—but rather, how long downstream players can endure. IV. What is truly oversupplied globally is high-cost, generic capacity—not effective capacity. Overcapacity has long been the biggest pressure point for the global chemical industry—and this pressure has not vanished despite the recent short-term surge in chemical product prices. S&P Global analysis indicates that capacity rationalization in Asia’s naphtha-cracking sector will continue. By around 2030, Japan is expected to withdraw at least 25% of its ethylene capacity. South Korea has also proposed cutting approximately 2.7–3.7 million tons/year of naphtha-cracking capacity—roughly 20–28% of its current total. It remains an indisputable fact that overall global bulk basic chemical capacity remains excessive. Yet this market cycle reveals a deeper truth: excess in total capacity does not equate to excess in *effective* supply capacity. Take ethylene, for instance: although global ethylene capacity is abundant, it is far from homogeneous. European capacity relies heavily on naphtha, facing high energy and feedstock costs; portions of Japanese and Korean capacity are aging and exiting; Middle Eastern capacity enjoys clear cost advantages—but is now hindered by shipping bottlenecks and geopolitical risks, limiting stable access to Asian markets. China hosts the world’s largest chemical system, yet still imports certain products; cost disparities across different feedstock routes remain enormous. In H1 2026, international crude oil prices rose, causing average per-ton profits for oil-based polyethylene to fall by RMB 527 and those for oil-based polypropylene to drop by RMB 215 year-on-year. Domestically, coal supply remained relatively stable: coal-based polyethylene average per-ton profits rose by RMB 333 year-on-year, while coal-based polypropylene profits surged by RMB 1,070. Such disparities mean this round of chemical price increases will not benefit all chemical enterprises equally.

Japanese Consortium Achieves 85% Ammonia Co-Firing in Naphtha Cracking Furnace

3 days ago

A Japanese consortium led by Mitsui Chemicals achieved an 85% ammonia co-firing rate in a naphtha cracking furnace, significantly reducing the carbon footprint of plastic production while maintaining NOx emission levels. The team plans to advance technology toward 100% ammonia firing in the next phase.

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Japanese Consortium Achieves 85% Ammonia Co-Firing in Naphtha Cracking Furnace

Japanese Consortium Achieves 85% Ammonia Co-Firing in Naphtha Cracking Furnace

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