{"id":42530,"date":"2025-08-14T11:37:01","date_gmt":"2025-08-14T11:37:01","guid":{"rendered":"https:\/\/quickassetsmarket.com\/index.php\/2025\/08\/14\/chinas-petrochemical-sector-faces-profit-squeeze-amid-expansion\/"},"modified":"2025-08-14T11:37:01","modified_gmt":"2025-08-14T11:37:01","slug":"chinas-petrochemical-sector-faces-profit-squeeze-amid-expansion","status":"publish","type":"post","link":"https:\/\/quickassetsmarket.com\/index.php\/2025\/08\/14\/chinas-petrochemical-sector-faces-profit-squeeze-amid-expansion\/","title":{"rendered":"China\u2019s petrochemical sector faces profit squeeze amid expansion"},"content":{"rendered":"
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China’s petrochemical sector anticipates significant growth in a key segment, projected to expand by nearly 50% by 2028. <\/p>\n

This expansion is set to occur despite intensified competition within the wider refining industry, which is negatively impacting profit margins, according to a Reuters report<\/a>.<\/p>\n

Li Suoshan, an executive at a chemical logistics company owned by Sinopec, announced on Thursday at a conference in China’s Jiangsu province that the capacity for ethylene\u2014a crucial component in plastics\u2014is projected to increase by 40 million metric tons between 2025 and 2028, reaching a total capacity of 100 million tons.<\/p>\n

Demand growth likely to slow down<\/h2>\n

Demand growth for traditional petrochemicals is projected to decelerate over the next five years. This slowdown is expected to result in weak margins in 2025, with a further reduction in profits anticipated.<\/p>\n

As China’s refining sector grapples with overcapacity and a weakening economy, many refiners are shifting their focus towards petrochemical products. <\/p>\n

This move is driven by dwindling fuel demand, a direct consequence of the accelerating adoption of electric vehicles. <\/p>\n

However, this surge in petrochemical production, while a strategic pivot for refiners, is paradoxically leading to a significant drop in petrochemical prices. <\/p>\n

The increased supply, intended to offset losses from traditional fuel sales, is creating an oversupply in the petrochemical market, thus eroding profit margins in this new segment.<\/p>\n

Fu Xiangsheng, vice chairman of the China Petroleum and Chemical Industry Federation, reported at the conference that refining and petrochemical losses rose by 8.3% in the first half compared to the previous year.<\/p>\n

He also noted that both sectors are experiencing “involution,” a term widely used in China to describe intense competition that eradicates profits.<\/p>\n

China\u2019s campaign<\/h2>\n

China is intensifying its campaign against what it labels “disorderly low-price competition,” a policy initiative aimed at curbing excessive price reductions and unsustainable growth in various industrial sectors. <\/p>\n

This heightened rhetoric underscores Beijing’s growing concern over potential market distortions and the long-term health of its domestic industries, particularly in areas susceptible to overcapacity.<\/p>\n

A prime example of this policy in action is the polysilicon sector, a foundational component in the manufacturing of solar panels. <\/p>\n

The industry has already taken proactive steps by proposing and beginning to implement plans to significantly cut production capacity. <\/p>\n

This move is a direct response to the government’s push for more disciplined market behavior and is intended to mitigate the negative impacts of oversupply, such as plummeting prices and diminished profitability for manufacturers. <\/p>\n

The goal is to foster a more stable and sustainable market environment for polysilicon producers, ensuring the industry’s continued growth and competitiveness on a global scale while avoiding ruinous price wars.<\/p>\n

However, determining how much capacity to cut, and in what manner, presents a significant challenge in China, given that local governments frequently have vested interests in major projects.<\/p>\n

Fu advocates for a nuanced approach to refinery closures, rejecting blanket rules based on size, utilization, or profitability. He suggests that such decisions should be a blend of state policy and market dynamics. <\/p>\n

He also anticipates a future rise in petrochemical prices as China addresses “involution,” though he didn’t specify a timeline.<\/p>\n

“Petrochemical industry associations are at the stage of conducting surveys and seeking feedback,” Yang Lin, principal petrochemical analyst at Guosen Securities was quoted in the report.<\/p>\n

\n

Areas such as refining and ethylene may see some moves.<\/p>\n<\/blockquote>\n

The post China’s petrochemical sector faces profit squeeze amid expansion<\/a> appeared first on Invezz<\/a><\/p>\n

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China’s petrochemical sector anticipates significant growth in a key segment, projected to expand by nearly 50% by 2028.  This expansion is set to occur despite intensified competition within the wider refining industry, which is negatively impacting profit margins, according to a Reuters report. Li Suoshan, an executive at a chemical logistics company owned by Sinopec, <\/p>\n","protected":false},"author":1,"featured_media":42531,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-42530","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investing"},"_links":{"self":[{"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/posts\/42530","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/comments?post=42530"}],"version-history":[{"count":0,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/posts\/42530\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/media\/42531"}],"wp:attachment":[{"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/media?parent=42530"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/categories?post=42530"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quickassetsmarket.com\/index.php\/wp-json\/wp\/v2\/tags?post=42530"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}