According to global authoritative institutions, is the era of supply-demand rebalancing approaching amid the ongoing wave of capacity shutdowns in the chemical industry?

If all the permanent capacity shutdown plans already launched by multinational corporations are fully implemented, global chemical industry capacity utilization will peak as early as 2028—marking the beginning of a new phase for the global chemical market. Structural adjustment in the chemical industry is accelerating. Over the past three years, three major factors—global energy price volatility, geopolitical tensions, and slowing demand growth—have jointly squeezed corporate profit margins, forcing the chemical industry to reassess its capacity layout. According to publicly available information, globally announced ethylene capacity shutdown plans for 2025–2028 total as much as 7.8 million tons per year. South Korea alone plans to shut down 2.7–3.7 million tons per year of ethylene capacity. Based on already-announced projects, approximately 10.5 million tons per year of planned new capacity face risks of delay or cancellation. Taken together, the withdrawal of existing capacity and the uncertainty surrounding new capacity further reinforce expectations of tightening supply. China’s ethylene capacity faces enormous transformational pressure. As a pivotal global chemical market, any capacity dynamics in China exert profound influence worldwide. Ahmed specifically pointed out that China operates four ethane-cracking units dependent on U.S. ethane imports, with a combined capacity of 3.7 million tons per year; these units face significant shutdown risks due to the long-standing imposition of extremely high tariffs between China and the U.S. Additionally, China has 11 million tons per year of mixed-feedstock ethylene capacity: if propane supply is interrupted and naphtha is substituted as feedstock, annual capacity would shrink by 1.7 million tons. China is currently advancing policies to optimize and integrate outdated capacity, which may lead to the retirement of aging, small-scale facilities totaling 6.1 million tons per year—further intensifying future global supply pressures. If all planned shutdowns materialize, the supply-demand landscape will inevitably be reshaped. Should all the aforementioned shutdown plans indeed be implemented—totaling 29.8 million tons per year of ethylene capacity—the compound annual growth rate (CAGR) of global ethylene capacity from 2024 to 2029 would fall to just 0.8%. Global ethylene capacity utilization would then exceed 90% as early as 2028, ushering the market into an era of tight equilibrium.

Why do stock prices fall?

Section 60: 'A River of Spring Water Flows Eastward' When a stock price breaks below its neckline with a strong, decisive bearish candlestick (long black candle), it is often followed by several consecutive long bearish candles—a pattern extremely common during the initial stage of domestic stock market declines. Subsequently, the price enters a volatile downward channel. On the daily K-line chart, the K-lines and the 5-day, 10-day, and 20-day moving average lines form a bearish alignment—creating the classic 'A River of Spring Water Flows Eastward' downtrend. Core reasons behind this trend: 1. A retail-dominated market after institutional exit: Once major institutional players have completely exited, stock prices are supported solely by retail investors. Retail trading is inherently fragmented and disorderly; when early bargain-hunters—who failed to time their entries correctly—are forced to cut losses and exit, there is insufficient buying interest at equivalent price levels, compelling them to sell at lower prices—causing the stock price to decline stepwise. 2. Synchronized downward shift of moving averages: If selling pressure is released uniformly, the cluster of moving averages will decline smoothly, at constant speed and equal spacing. This type of gradual, volume-light decline fails to attract substantial buying interest, as it offers no clear rebound profit opportunity. 3. Panic selling and oversold rebounds: When panic-driven selling emerges, the stock price may accelerate downward, accompanied by widening deviation rates (e.g., BIAS). Only under such deeply oversold conditions will bargain-hunting capital enter the market, seeking short-term rebound profits. 4. Decline on low volume and active intervention by new institutional players: As the downtrend evolves into a low-volume, gradual decline, downward momentum naturally weakens (in line with the physical principle of diminishing bearish force). However, newly entering institutional players—seeking to shorten their accumulation period—may deliberately depress prices (e.g., via gap-down openings or end-of-day plunges), thereby maintaining or even accelerating the pace of decline, avoiding a prolonged, low-volume bottoming-out process.

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Westlake Chemical Partners stock traded below its 200-day moving average at $21.5150, maintaining a Moderate Buy consensus among analysts. The company also announced a quarterly dividend of $0.4714 per share, yielding 8.8%.

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