SEOUL, South Korea—An increasing number of Asian plastics and chemicals plants could be closing their doors this year because of slowing growth.
The petrochemicals industry now realizes that demand will not improve measurably anytime soon to offset low margins, Alex Lidback, ICIS chemical analytics vice president, said last week at the Asia Petrochemical Industry Conference (APIC) in Seoul.
Lidback's comments were included in a report from ICIS, a global consulting and data firm based in Houston.
"Margins for most products are suffering," he said. "It's very difficult to grow your way out of excess capacity."
Lidback cited excess capacity growth in recent years, particularly in China, as reasons for the current market downturn. The Asian market now has overcapacity in ethylene, propylene, ethylene glycol, paraxylene and styrene—all of which are resin feedstocks.
"The overcapacity is unprecedented," Lidback said. "Unless there are extensive shutdowns, the market will not rebalance most products anytime soon."
He added that unlike previous supply and demand cycles, China is no longer able to absorb excess capacity. That country's imports of base chemicals declined by more than 26 billion pounds from 2020 to 2023.
The industry will need to make some difficult decisions to reclaim its balance, including permanent plant closures, project delays and even cancellations, according to Lidback. He added that while low-cost assets in the Middle East and North America are secure, higher-cost producers in other regions are vulnerable.
