In the next 18 months, the global ethylene production capacity of more than 30 million tons will be shut down?

At the Asian Petrochemical Conference (APIC) in May 2026, Boston Consulting Managing Director Alan Rajamani issued a heavy judgment: in the next 12-18 months, the global total of more than 30 million tons/year of ethylene inefficient production capacity must be permanently shut down. The industry has officially entered a centralized integration cycle. These devices are long-term loss-making, uncompetitive old devices, no matter how short-term fluctuations in oil prices, will eventually exit the stage of history.

europe (over 16 million tons, 53%): permanent withdrawal from 2024 to the first half of 2026 4.5 million tons, the next 12-18 months plan to phase out again 11 million tons old naphtha cracking capacity. Representative cases include: ExxonMobil UK 830000 tons, SABIC Netherlands 530000 tons, Dow Germany 510000 tons, Versalis Italy 980000 tons, as well as Total, Inox's several sets of small and medium-sized crackers. These units have continued to lose money since the European energy crisis in 2022, with long-term operating rates below 75%, and mostly a single naphtha route, lack of feedstock flexibility.

Northeast Asia (over 12 million tons, 40%): mainly concentrated in Japan and South Korea. The South Korean government took the initiative to promote industry mergers and acquisitions restructuring, YNCC, Lotte Chemical, LG Chemical multiple sets of million-ton naphtha cracking plan shut down, the total reduction of domestic about. 25% ethylene capacity, about 7.5 million tons. On the Japanese side, a single set of 50-700000 tons of old small installations by enterprises such as Guangguang and ENEOS were withdrawn in batches, totaling about 4.5 million tons.

Other regions (over 2 million tons, accounting for 7%): mainly for Southeast Asia, Australia and other small and medium-sized old cracking devices, no scale advantages, do not have an integrated model, will be adjusted with the local industry gradually clear.

It is worth noting that, china is not on the 30 million-ton list.. The Boston Consulting Group clearly pointed out that China's new production capacity is mainly large-scale refining and chemical integration, coal-to-olefins, light hydrocarbon cracking, with a single set of large-scale and diversified raw material routes; the domestic phase-out is mainly 300000 tons and less old plants, which are shut down through capacity replacement and are not included in the scope of global structural clearance.

① Cost stratification and solidification, Europe, Japan and South Korea deep loss of equipment

global ethylene production costs have clearly differentiated into three echelons: the cost of ethane cracking in the Middle East is no higher $450/ton; U.S. shale ethane and China's large integrated plant costs in 550-700 USD/ton the cost of imported naphtha as raw material in Europe and Japan and South Korea exceeds $800/ton. There is more than between Europe, Japan and Korea and the lowest cost. $400/ton the cracking spread, in the context of increased global competition, continued losses are the inevitable result.

Lack of integration model and weak anti-risk ability

middle East chemical enterprises, China's head refining enterprises (such as Sinopec, Hengli, Rongsheng, Baofeng, etc.) are deeply supporting PE, PP, ethylene glycol, PVC and other downstream devices, the degree of perfection of the industrial chain directly determines the ability to resist cycles. In Europe, Japan and South Korea, there are a large number of single cracking plants, ethylene export-oriented, profits completely with raw materials fluctuations, the ability to resist risk is very weak.

③The global trade pattern is reshaped, and cheap goods continue to replace local production capacity.

The cheap ethane by-product of the U.S. shale oil and gas revolution has created a cost advantage for ethylene in the U.S. and the Middle East; low-cost ethylene derivatives in the Middle East continue to be exported to Europe, Japan and Korea, continuing to squeeze the market share of local devices. Superimposed on the implementation of the EU carbon border tax, the export cost of local products further increased, overseas low-cost goods on the European market to form a fatal impact.

④ Double attack of carbon policy and new technology

in 2026, European carbon tariffs will be fully implemented, Japan and South Korea's new regulations on carbon and energy consumption will be pushed forward simultaneously, the energy-saving transformation of old installations and CCUS investment have far exceeded the value of the assets themselves, and enterprises generally choose to shut down directly rather than technical reform. The continuous commissioning of the new generation of ethane cracking, coal-to-olefins and green hydrogen ethylene processes has further compressed the living space of the old steam cracker.

the global structural clearance of 30 million tons of ethylene will benefit China's chemical industry from three dimensions:

price pivot uplift: large-scale supply contraction will push the global ethylene industry operating rate back to a healthy range, PE, PP, ethylene glycol and other downstream products price center is expected to continue to move up, improve the earnings expectations of domestic production enterprises.

Capacity concentration dividend: global petrochemical production capacity will accelerate to the Middle East and China and other low-cost integrated production areas, China's head refining enterprises in the global market share and pricing voice will be further enhanced.

export window expansion: as the local production capacity of Europe, Japan and South Korea continues to shrink, their dependence on imports of petrochemical products from China and the Middle East will systematically increase, opening a larger export window for Chinese chemical products, which is worth the advance layout of traders.