OPIS Forum: China’s Petchems See Steady Demand Amid Margin Pressure
China’s petrochemical industry continues to face steady demand as well as significant challenges, with profits expected to remain under pressure, said Yixin Xu, associate researcher with Sinopec Economics & Development Research Institute at the OPIS Energy and Chemicals Forum on Wednesday.
The country’s plan to boost consumption, introduced in March, and higher-than-expected exports have supported demand increases for chemicals, particularly for ethylene and propylene. These have been driven mainly by packaging, electrical appliances and auto manufacturing, he said.
In the first half of the year, downstream capacity expansion slowed down in the aromatics sector, with paraxylene growing a modest 1.8%, while consumption in the resin, rubber, and fiber and feedstock segments grew 11.1%, 17.4% and 5.9%, respectively, according to Xu.
On the other hand, the aromatics sector’s supply-demand dynamics are being optimized. Although PX supply is tightening with no new capacities being added in the second half, demand continues to rise. This points to a decline in China’s self-sufficiency, while purified terephthalic acid remains in a state of oversupply.
The olefins market in the second half of 2025 is expected to see fewer exports and lower new capacities coming online. Meanwhile, with steady growth in China’s textile consumption, demand in the polyethylene terephthalate sector is recovering in H2, Xu said.
These developments come amid China’s GDP growth of 5.3% in H1, spurred by local consumption and exports, he noted, despite the impact of tariffs and pricing pressures.
Oil prices fluctuated during the same period due to a combination of trade friction, geopolitical conflicts and OPEC+ production strategies.
“The average oil price was a bit lower than the year before, averaging at $70/bbl,” he said. “Demand increments were falling short of expectations, and abundant non-OPEC supply has caused OPEC to postpone production increases on multiple occasions. The persistent Russia-Ukraine conflict and escalating Middle East tensions all enlarged the volatility of the oil price.”
However, slowing global trade began to impact economic growth in H2, particularly for emerging markets focused on manufacturing due to high tariffs. As a result, China’s full-year GDP is projected to grow by 5.0%, and negative growth is likely to continue in the fourth quarter, according to Sinopec EDRI.
Expanding global oversupply is expected to put downward pressure on oil prices, which may show a “high first, then low” trend in H2. Oil is forecast at $60-70/bbl, with crude surplus expected in H2 due to capacity increases in non-OPEC regions, combined with OPEC’s production increase plan.
In H1, operating rates at China’s refineries, especially state-owned enterprises, fell due to several maintenance shutdowns. Moreover, independent “teapot” refineries have been operating at low utilization rates since mid-2024, a result of an ongoing structural transformation.
The OPIS Energy and Chemicals Forum was held in Singapore and attracted over 200 participants.
–Reporting by Serena Seng, sseng@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com