China, SE Asia Olefins outlook for 2025: Poor profitability to dominate ethylene, propylene value chains

Low profitability and poor margins were the driving concerns for Asian olefins in 2024. The ethylene and propylene value chains across key downstream sectors—such as polyethylene (PE), polypropylene (PP), styrene monomer (SM), mono-ethylene glycol (MEG), acrylonitrile, phenol, cumene, and isopropanol (IPA)—faced significant pressure from lower margins, higher production costs, and bearish demand.

A combination of higher upstream costs (including crude oil, naphtha, propane, and ethane) and weak downstream profits is likely to dominate the Asian olefins chain throughout 2025.

Asian ethylene prices remained at depressed levels from the second quarter of 2024 onwards. Ethylene prices fell from early March’s $1020/ton CFR SEA and $960/ton CFR China to $930/ton CFR SEA and $850/ton CFR China by early July, reflecting a 9–11% decline. NEA/China propylene prices managed to hold steady during the first half of 2024, slipping only slightly from $880/ton in mid-June to $840/ton CFR China by late November, a 4–5% decrease. Although SEA ethylene prices experienced a brief recovery between August and mid-September, they flattened and remained stable through most of the fourth quarter.

NEA/China ethylene struggled until October but recovered on fresh demand triggered by the start-up of new downstream facilities, including Shenghong Petrochemical’s EVA and POSM plants and Wanhua Chemical’s new LDPE plant.



The impact of crude on feedstocks: ethane, propane and naphtha

Volatility in crude oil prices will continue to influence ethane, propane, and naphtha costs, which in turn affect olefin prices. For 2025, should Brent crude trades above $80/bbl for an extended period, higher feedstock costs could push ethylene and propylene prices above 2024 levels. Conversely, sustained crude prices below $80/bbl would lower feedstock costs, providing much-needed relief to cracker operators through higher run rates and shorter shutdowns.

Higher or lower feedstock prices should, at the minimum, provide a floor or ceiling price for where support levels should be for ethylene and propylene. There will still be the need for real demand to lift olefin prices substantially higher, which should be provided by the primary key derivatives, mainly PE and PP, as well as MEG, SM, PVC, PO, acrylonitrile, acrylic acid and oxo-alcohols. If derivative markets are not able to support higher olefin feedstock prices, then cracker and PDH plant run rates will likely be reduced.

Cracker run rate cuts and extended shutdowns will likely persist in 2025

Faced with razor-thin margins, and persistent losses, several Southeast Asian cracker owners (olefins producers) have shut their crackers in Q4, 2024 for extended shutdowns of between three to six months duration. Additionally, the start-up of Lotte Chemical’s New LINE project will be delayed until Q2/Q3, 2025.

The Lotte Chemical Indonesia New Ethylene (LINE) Project is expected to increase the production capacity of Lotte Chemical Titan Holding Bhd (LCT) by 65% to 5.8 million tons/year. The project is expected to be completed in 2025, with new ethylene capacity of 1 million tons/year and propylene capacity of 520,000 tons/year. The LINE project was scheduled to start up in Q1, 2025 but will now be delayed to Q2/Q3, 2025, according to industry sources.

Vietnam’s Long Son Petrochemical shut its 1 million tons/year ethylene cracker, located at Ba Ria-Vung Tau in late October. Traders commented that there is no restart date confirmed, and resumption of operations will depend on production economics.

Philippines’ JG Summit will shut its Batangas naphtha cracker in late December due to margin concerns. Traders commented that the producer has briefed the industry that the outlook is poor for the ethylene and propylene value chains. The cracker produces 480,000 tons/year of ethylene and 240,000 tons/year of propylene. The cracker is slated to restart by the first-half, or June 2025, depending on economics, according to traders.

For 2024, across Northeast and Southeast Asia, major producers kept cracker and PDH plant run rates at lower levels of around 65 to 80% when olefin prices fell to the low-to-mid $800s/ton CFR China/SEA, as calculated in ChemOrbis Production News Pro. When prices started to recover from March to April, and in late Q4, producers then slowly raised operating rates above 80%.

Major producers will want to keep a tight control on their production margins, which means run rate cuts will remain an optimal tool to maintain the olefin demand and supply balance, with producers deepening rate cuts for both crackers and PDH plants as production costs rise and margins decline.

These moves underscore the dire state of regional producers, many of whom are also exploring mergers, acquisitions, or shifts to more competitive feedstocks, as is the case with Vietnam’s Long Son Petrochemical, as they plan to switch to ethane feedstock, to survive. Without significant policy support or cost reduction strategies, plant closures may follow in 2025.

US-to-Asia ethylene arbitrage flows to decrease in 2025

The influx of US ethylene exports to Asia placed significant pressure on regional spot prices in 2024. While arbitrage flows are expected to continue in 2025, the volumes are likely to be lower than in 2024.

Ethylene prices were dragged lower since April by the onslaught of deep-sea, ex-USG ethylene cargo arrivals into Asia in May, and through to July, that were sold at progressively lower levels, from the mid-900s/ton CFR China/NEA to the mid-$800s/ton CFR China level. A major US exporter, Enterprise Ethylene, had shipped over 200,000 tons of ethylene cargoes that arrived in April, May, June, and July.

Downstream outlook: Bearishness to prevail for PE, PP markets in 2025

PE markets in China and Southeast Asia are expected to face continued challenges in 2025, driven by chronic oversupply, economic uncertainty, and geopolitical risks. Import prices mostly trended downward in 2024 due to intense competition among suppliers, with year-end destocking by U.S. exporters exacerbating supply pressures.

Some PE players anticipate a temporary price rebound in Q1 2025, supported by producers prioritizing margins over aggressive sales post-destocking, along with demand ahead of the Lunar New Year in late January. However, achieving a sustainable supply-demand balance is likely to remain elusive throughout 2025.

Similarly, PP markets in China and Southeast Asia are expected to also head into very challenging waters in 2025, marked by significant capacity expansions and weak demand growth. China’s PP production capacity has continued to expand, while some start-up plans have also been scheduled in Southeast Asian countries, leading to increasing oversupply on the horizon.

Geopolitical risks and demand recovery prospects

The return of Donald Trump as U.S. president raises concerns about renewed U.S.-China trade tensions, with proposed tariffs on Chinese goods likely to exacerbate the challenges for an already fragile Chinese economy. Grappling with a property market crisis, high debt levels, and deflationary pressures, China’s economic struggles could spill over to regional PE producers, particularly those dependent on export markets.

A broader recovery in global demand also remains uncertain, hampered by subdued consumer spending, weak global economic conditions, and shifting consumption patterns. The International Monetary Fund (IMF) has lowered its global growth forecast for 2025 to 3.2%, citing geopolitical risks and trade protectionism, while the Asian Development Bank (ADB) revised its growth outlook for developing Asia to 4.8%.

In China, despite a steady 4.5% growth forecast for 2025, demand pressures persist. The government’s policy measures, including tax incentives, a loose monetary stance, and procurement support for locally made products, aim to boost domestic consumption but are expected to take time to yield meaningful results.