The petrochemical industry is still at the peak of investment

At present, the petrochemical industry is still at the peak of investment. In the next few years, the production capacity of large-scale petrochemical and chemical products will continue to grow rapidly, which will lead to increasingly fierce competition in the industry and make it more difficult for enterprises to make profits. At the same time, a large amount of investment in bulk basic raw materials and low-end chemicals, resulting in increasingly prominent development imbalances, structural contradictions intensified. (Source: China Petroleum and Chemical Industry Federation "2024 Key Petrochemical Production Capacity Early Warning Report")

China's high-end chemical products are not developed enough and still need to rely on imports. For example, the self-sufficiency rate of high-end products such as engineering plastics, functional membrane materials, and electronic chemicals is less than 80%, and the self-sufficiency rate of high-end polyolefins, high-performance fibers and other products is also low.

Although the global inflation level has declined and the external demand situation has improved overall, the adverse impact of domestic exports and the real estate industry still exists, which still has a negative pulling effect on the recovery of domestic consumption. In particular, the export of products closely related to the petrochemical industry such as traditional textiles and plastic products is still facing competitive pressure. (source ibid.)

The petrochemical industry faces the risk of overcapacity, especially the already oversupplied propylene, polypropylene, PTA, caprolactam and other products. In addition, some high-end products such as POE and lithium iron phosphate also have signs of overheating investment. (Source: China Petroleum and Chemical Industry Federation "2024 Key Petrochemical Production Capacity Early Warning Report")