BLOG: China’s C2 and C3 capacity in 2025 forecast to be 121% and 179% more than local demand

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson.

One of the arguments still doing the rounds out there is that this year will mark the turning point as global petrochemicals operating rates, margins and spreads recover.

As they say, good luck with that idea. As today’s blog discusses in detail:

• In 2024 over 2023, China’s ethylene capacity exceeding local demand is estimated to have fallen by 1.6m tonnes. But in 2025 compared with 2024, it is forecast to increase by 6.3m tonnes to an all-time high of 11.5m tonnes. This would represent a year-on-year increase of 121%. Actual capacity is due to increase by 9m tonnes in 2025 over 2024, the biggest annual increase on record.
• Propylene oversupply is far worse reflecting the several routes to make propylene other than just the steam cracker – the only major route to produce ethylene. In 2024 over 2023, propylene capacity exceeding demand was at 2.7m tonnes. This year compared with 2024 oversupply is expected to reach 7.4m tonnes. Capacity exceeding demand is forecast to total 20.3m tonnes in 2025, 179% higher than in 2024. Annual capacity is due to increase by 9.6m tonnes in 2025 or 2024, which would again by the biggest annual increase on record.

China’s global shares of capacity exceeding demand are also forecast to jump in 2025 as it overtakes all the other regions.

One saving grace might be that increased trade protectionism prevents China from exporting its surplus ethylene and propylene molecules, either directly as derivatives or indirectly as packaging for or components of finished goods.

This might create more regional markets and force China to delay start-ups.
But it seems more likely to me that there will just be a shuffling of the pack as more Chinese manufacturing moves offshore to bypass tariffs.

You might think that the other “get out of jail for free” card will be a rebound in Chinese domestic demand.

Again, good luck with that idea because of the end of the real estate bubble and China’s demographics crisis.

So, here is another prediction for 2025: Global petrochemicals operating rates, spreads and margins will decline versus last year because for the scale of China’s capacity additions and the country’s continued ability to export its excess molecules, either directly or indirectly.

Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.