According to the latest data released by Bloomberg New Energy Finance (BNEF), the world will commission a net 14.6 million metric tons of ethylene capacity in 2026—roughly double the average annual expansion over the previous five years—setting a new record for annual growth. China will account for 56% of the global net new ethylene capacity in 2026, making it the key driver of this expansion cycle.

The agency believes most of this new ethylene capacity is highly likely to come online. Over 13 million tons per year of the new capacity will come from world-scale cracker projects backed by leading global oil and chemical companies, which are already in the late construction phase. Examples include China's Huajin Aramco and Fujian Gulang cracker projects, the UAE's Borouge IV project, South Korea's Shaheen project, and the U.S.'s Golden Triangle project.

Polyethylene (PE) is seen as the key driver behind this surge in ethylene capacity. The agency's data indicates that new polyethylene capacity is projected to reach a record 14.7 million tons in 2026, compared to an average annual increase of 5.4 million tons over the previous five years. This surge stems primarily from two sources: China's aggressive push toward polyethylene self-sufficiency (China remains a major polyethylene importer) and a wave of ethane-based polyethylene projects in the United States, the Middle East, and Russia.

Bloomberg New Energy Finance also anticipates a significant increase in global propylene capacity by 2026, though with lower certainty than for ethylene. Data indicates approximately 13.1 million tons of global propylene capacity could come online by 2026. While this would set a record for capacity growth, roughly 6 million tons will originate from propane dehydrogenation (PDH) units. Progress on these projects is less stable than that of large-scale cracking facilities. Furthermore, with China achieving self-sufficiency in polypropylene (PP), many PDH projects may stall.

Furthermore, capacity expansion for other derivatives like polyvinyl chloride (PVC) and styrene will slow. The agency noted China's aggressive development of these chemicals in recent years, but new capacity additions after 2026 are likely to be minimal.

Notably, the petrochemical industry currently faces oversupply, with capacity growth for base chemicals like ethylene and propylene significantly outpacing demand for years. By 2026, this supply-demand gap will widen further, with ethylene oversupply being particularly pronounced.

Fitch Ratings maintains its negative outlook for the global chemical industry, citing persistent structural imbalances and market weakness as key challenges. Even with capacity shutdowns in some regions, new capacity additions will still outpace demand growth. Dai Yifan, Senior Director at Nanhua Futures Research Institute, also pointed out that the current chemical market is experiencing its worst spot market conditions in nearly seven to eight years. Looking ahead to 2026, the continued high capacity additions will keep the surplus problem acute, potentially leading the industry into a “year of decline.”

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