According to China Chemical Information Weekly, energy giant ExxonMobil recently announced it will permanently shut down its 830,000-ton-per-year steam cracker at Moss Moran in Scotland, UK, by February 2026. Following this closure, the UK will retain only one ethylene cracker. This marks another significant retrenchment in its European market after shutting down the 425,000-ton-per-year facility in Gravelines, France, in 2024. This move is not an isolated case but emblematic of a broader wave of shutdowns sweeping Europe's petrochemical industry.

Statistics show that since April 2024, multinational petrochemical firms including ExxonMobil, Shell, SABIC, Dow, Versalis, and TotalEnergies have permanently closed or plan to close seven cracker units in Europe by 2027, with several additional units up for sale. Commodity Insights data indicates this round of capacity reductions involves approximately 4.5 million tons/year of ethylene, 2.3 million tons/year of propylene, and 430,000 tons/year of butadiene in nominal capacity across Europe.

Cost Disadvantages Highlighted: High Shutdown Risks for European, Japanese, and Korean Plants

Woodmac data indicates that the global ethylene operating rate has declined by about 8% compared to 2021. Among 330 ethylene assets, approximately 114 plants—representing a combined capacity of 55 million tons per year—face shutdown risks, with high-risk capacity reaching 12 million tons per year.

Cost competitiveness is the core driver. According to ICIS data, global ethylene capacity totals approximately 230 million tons by 2024. Europe's capacity stands at 44 million tons with costs around $885/ton, while Japan and South Korea's capacity is 19.9 million tons with costs between $800–850/ton—significantly higher than the $200–350/ton costs of the ethane cracking route in the US and Middle East. Amid persistently mounting supply pressures, high-cost facilities face imminent closure.

Severe profit erosion has severely impacted plant operations. Elevated feedstock and energy costs, coupled with lower prices for imported ethylene derivatives, have triggered successive shutdowns of ethylene cracking units across Europe. S&P data indicates that by the end of 2024, European cracker utilization rates had fallen to a historic low of approximately 75%, leaving about 2 million tons/year of capacity idle compared to the historical peak of 90%. Between 2025 and 2027, Europe plans to exit 4.3 million tons of capacity. Chemical giants like SABIC, Dow Chemical, and Shell in Germany, France, and the Netherlands are adjusting their European strategies, exiting or selling chemical assets.

Pressure also mounts in Japan and South Korea. Japan's ethylene plant utilization rate has remained below the 80% breakeven point for two consecutive years, plunging below 70% in June 2025—its lowest since 2009. Among its total 6.5 million tons of ethylene capacity, approximately 975,000 tons face prolonged shutdown or closure risks. Companies including Idemitsu Kosan, Maruzen Petrochemical, and INEOS have announced potential shutdowns or restructuring of related facilities between 2026 and 2027, affecting approximately 1.35 million tons of capacity.

South Korea has initiated industry consolidation under government guidance, planning to shut down 25% of its naphtha cracking units, affecting ethylene capacity by approximately 2.7-3.7 million tons/year. LG Chem and GS Caltex are negotiating the integration of their Yeosu steam cracking units, while Yeochun NCC (YNCC) has announced the shutdown of its No. 3 naphtha cracking unit (915,000 tons/year ethylene capacity) to alleviate persistent losses.

China's Competitive Edge Reshapes Global Supply Landscape

In stark contrast to overseas capacity contraction, China is experiencing a peak in ethylene capacity additions. Having become the world's largest ethylene producer in 2022, China will see nearly 10 million tons of new domestic capacity added by 2025. Total output is projected to reach 53.3 million tons, marking an 11.9% year-on-year increase, with total capacity reaching approximately 62 million tons per year.

Projections indicate China's ethylene capacity growth will decelerate after 2027. By 2028, the equivalent supply gap is expected to be largely closed, enabling self-sufficiency in ethylene and key downstream products. China may then transition into a net ethylene exporter, joining the United States and the Middle East in jointly dominating global supply.

China's ethylene industry possesses significant competitive advantages: a highly diversified feedstock structure (naphtha cracking accounts for approximately 69%, coal/methanol-to-olefins for about 16%, and ethane cracking for roughly 11%); large refinery ethylene integrated processing costs are 30%-40% lower than in Europe; and its cost advantage is further amplified amid low international oil prices. Simultaneously, shutdowns of overseas facilities have mitigated international naphtha price volatility, reducing raw material procurement risks.

China's Leading Domestic Producers Strengthen Global Market Position

Ethylene production capacity serves as a key indicator of core competitiveness for chemical enterprises, with domestic leaders demonstrating significant advantages:

Sinopec: The largest producer with total ethylene capacity of approximately 15 million tons/year, operating multiple million-ton-scale bases including Zhenhai Refining & Chemical and Sinopec-SABIC Tianjin.

CNPC: Total ethylene capacity of approximately 11 million tons/year, supported by core bases like Dushanzi Petrochemical (2 million tons/year) and Jilin Petrochemical (1.9 million tons/year), with ongoing projects such as the Talim Phase II expansion.

Rongsheng Petrochemical: Leading private refining and petrochemical enterprise, operating the world's largest single-site integrated refining and petrochemical project with 40 million tons/year capacity, including 4.2 million tons/year ethylene production. Ranks third in ethylene scale with the highest operational flexibility.

Baofeng Energy: Ethylene capacity of approximately 2.6 million tons/year.

Analysts note that the global petrochemical industry continues to undergo restructuring. The contraction of ethylene capacity in Europe, Japan, and South Korea stands in stark contrast to China's capacity optimization. Leading Chinese enterprises should seize this historic opportunity, driven by technological innovation and green transformation. This will not only boost exports but also elevate their position in the value chain, establishing more core competitive advantages within the new global petrochemical industry order.

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