Refining margins are projected to remain at current levels through 2025
for demand growth to absorb the far greater increase in supply. Steam cracker margins are not expected to recover until after 2027 when capacity additions begin to taper off. Adding to the challenges, the potential imposition of a hefty import tariff – up to 60% – on Chinese goods by the Trump administration could significantly disrupt China’s plastic exports. Such a measure would further strain demand growth, exacerbating pressure on the already oversupplied market. In 2025, the global polyolefins market will face a complex mix of opportunities and challenges. Capacity expansions, particularly in Asia and the Middle East, will continue to meet demand across industries, namely those associated with industrialisation. Global utilisation is on a downward trend. Meanwhile, sustainability efforts will intensify, with companies investing in recycling technologies and circular economy initiatives. These factors, coupled with rising production costs, will drive a market that is both volatile and growth-oriented, with innovation and strategic capacity expansions helping to stabilise supply. Octane levels are expected to remain close to levels seen in the second half of 2024. With the gasoline market lengthening in the Atlantic basin, polyester production will become the main factor dictating paraxylene (PX) margins. Benzene-naphtha spreads are projected to decrease starting in 2025 as the growth
in supply gradually surpasses the growth in consumption. China’s capacities will continue to add pressure to global markets despite export-oriented Chinese players facing tougher conditions in 2025. Overcapacity in China and highly integrated chemical production will be key to its industry competitiveness in 2025. Trump’s return to the White House and the increasing number of Anti-Dumping Duties applied to Chinese-origin products will be key to changes in global trade. Operating rates are expected to continue recovering across the polyester value chain, while global styrene operating rates will start bottoming in 2025. However, rationalisation risk remains, especially in certain parts of Europe chains. Conclusions All parts of the extended oil value chain (from oil markets to aromatics and polyolefins) enter 2025 with ample spare capacity, making demand growth crucial to the commercial performance of the individual sectors. Geopolitics and trade tariffs are critical uncertainties that need to be closely monitored, as these could play a key role in defining the winners and losers. Policy is a key risk for the viability of liquid renewables.
Alan Gelder alan.gelder@woodmac.com
www.decarbonisationtechnology.com
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