SunSirs: Petrochemical Industry May “Bottom Out and Rebound” in 2026

On February 6, the China Petroleum and Chemical Industry Federation (CPCIF) held the “2025 China Petroleum and Chemical Industry Economic Performance Conference” in Beijing. At the event, Fu Xiangsheng, Vice President of CPCIF, and Liu Guolin, Deputy Director of the Information and Market Department, presented the economic performance and characteristics of the petrochemical industry in 2025 and offered an outlook for the sector's development in 2026.

2025: Overall Steady Progress in “14th Five-Year Plan” Performance

Fu Xiangsheng stated that despite sustained economic pressures in 2025, the industry achieved stable growth in production and consumption of major petrochemical products, with exports of key products and materials maintaining a positive trend. Looking back on the extraordinary five years of the 14th Five-Year Plan period, the petrochemical industry achieved significant progress and new breakthroughs in several areas: the economic scale, production capacity, and output reached new heights; industrial layout and structural optimization advanced; independent innovation capabilities and breakthroughs in key core technologies strengthened; green and low-carbon transformation and digital upgrading accelerated; and efforts to cultivate world-class enterprises and world-class petrochemical industrial clusters made notable strides. 2025 marks the concluding year of the 14th Five-Year Plan. Compared to the final year of the 13th Five-Year Plan, the industry's total operating revenue increased by 41.4% and profits rose by 36.2%. Overall operational performance during the 14th Five-Year Plan period remained stable with steady progress, achieving an average annual growth rate of 4% in main business revenue and 6.4% in total profits.

Seven Key Economic Indicators

At the meeting, Liu Guolin released seven key economic indicators for the petrochemical industry in 2025.

1. Industry industrial value-added maintained rapid growth, exceeding the national industrial average

In 2025, industrial value-added of enterprises above designated size grew by 6.9% year-on-year, 1 percentage point higher than the national industrial growth rate during the same period, sustaining robust expansion.

The annual trend showed a pattern of lower growth in the first half and higher growth in the second half. From January to March, the growth rate was 6.5%, rising to 6.6% for January-June, 7.2% for January-September, and 6.9% for January-December, with the second half generally outperforming the first half.

2. Stable production of key energy and chemical products

Crude oil and natural gas production grew steadily. In 2025, national crude oil output reached 216 million tons, up 1.5% year-on-year, marking the seventh consecutive year of production growth. National natural gas output totaled 261.89 billion cubic meters, increasing by 6.2% year-on-year, with production growth exceeding 10 billion cubic meters for nine consecutive years.

Crude oil processing volume increased. In 2025, the cumulative crude oil processed nationwide reached 738 million tons, up 4.1% year-on-year. Crude oil processing volume has remained above 700 million tons for three consecutive years.

Refined oil production declines. In 2025, national refined oil production (combined gasoline, kerosene, and diesel; same below) reached 413 million tons, a 1.4% year-on-year decrease. Specifically:

- Gasoline production: 155 million tons, down 3.4% year-on-year

- Kerosene production: 58.937 million tons, up 5.9% year-on-year and diesel production reached 200 million tons, down 1.8% year-on-year.

Production of major chemicals maintained rapid growth. In 2025, national output of key chemicals continued to expand at a fast pace. Ethylene production reached 41.508 million tons, up 6.4% year-on-year; sulfuric acid production hit 111 million tons, rising 4.5% year-on-year; caustic soda production totaled 46.535 million tons, increasing 5% year-on-year; Soda ash production reached 39.572 million tons, up 4.3% year-on-year; Synthetic resin production reached 148 million tons, up 11.3% year-on-year; Fertilizer production (on a pure basis) reached 64.808 million tons, up 7.1% year-on-year; Chemical pesticide technical grade production (on a pure basis) reached 4.117 million tons, up 8.7% year-on-year; Rubber tire casing production reached 1.207 billion units, up 0.9% year-on-year.

3. Overall Growth in Apparent Consumption of Key Energy and Chemical Products

In 2025, the apparent consumption of energy and major chemical products nationwide continued to grow. Annual apparent crude oil consumption reached 791 million tons, up 3.5% year-on-year; apparent natural gas consumption reached 434.02 billion cubic meters, up 2.2% year-on-year. Nationwide apparent consumption of refined oil products reached 377 million tons, down 1.4% year-on-year. Apparent consumption of gasoline, kerosene, and diesel stood at 147 million tons, 37.55 million tons, and 193 million tons respectively, representing year-on-year changes of -2.5%, +1.0%, and -1.1%.

Ethylene apparent consumption increased by 7.7% year-on-year, sulfuric acid rose by 2.7%, caustic soda grew by 2.8%, while soda ash decreased by 0.8%. The apparent consumption of synthetic resins reached 152 million tons, up 6.8% year-on-year; synthetic rubber consumption stood at 13.824 million tons, down 14.6% year-on-year; and the apparent consumption of synthetic fiber monomers and polymers totaled 97.893 million tons, increasing by 6.6% year-on-year. The apparent consumption of fertilizers (on a pure basis) amounted to 59.502 million tons, rising 1.4% year-on-year.

4. Major Energy and Chemical Markets Experience Volatile Price Declines

Throughout 2025, energy and chemical prices fluctuated downward, maintaining a sustained downward trajectory throughout the year. Price indices released by the National Bureau of Statistics showed that the year-on-year decline in the Producer Price Index (PPI) for the petroleum and natural gas extraction industry reached 9.9%, while the PPI for the chemical raw materials and chemical products manufacturing industry fell by 4.9%.

Data monitored by the China Petroleum and Chemical Industry Federation (CPCIF) indicates that in 2025, the average spot price of Brent crude oil was $69.2 per barrel, down 14.4% year-on-year, while the average spot price of WTI crude oil was $64.8 per barrel, also down 14.4% year-on-year.

Chemical market prices experienced significant declines, particularly among organic chemical raw materials and synthetic materials, where numerous product categories saw price drops. Monitoring data indicates that among major inorganic chemical raw materials, 75% of product categories recorded year-on-year declines in average market prices for the year. Among major organic chemical raw materials, 87% of product categories saw year-on-year declines in average market prices. Among major synthetic materials, 85% of product categories experienced year-on-year declines in average market prices.

5. Decline in Industry Revenue and Profit Totals

In 2025, the national petroleum and chemical industry had over 33,000 enterprises above designated size, achieving cumulative operating revenue of CNY15.67 trillion, down 3% year-on-year, and total profits of CNY 702.09 billion, down 9.6% year-on-year. In 2025, the industry's operating revenue and total profit accounted for 11.3% and 9.5% of the national above-scale industrial sector, respectively. The operating revenue profit margin stood at 4.48%, a decrease of 0.37 percentage points year-on-year.

From an industry structure perspective, major segments experienced varying degrees of decline in operating revenue and total profit. The oil and gas segment recorded cumulative annual operating revenue and total profit of CNY1.4 trillion and CNY 277.11 billion, respectively, representing year-on-year decreases of 4.6% and 19.1%. The chemical segment achieved cumulative operating revenue and total profit of CNY 9.6 trillion and CNY 417.36 billion, respectively, reflecting a 0.5% increase and a 4.1% decrease year-on-year. The refining segment incurred losses.

6. Total Import and Export Trade Declines, While Export Volume Grows Rapidly

In 2025, the total import and export trade volume of China's petroleum and chemical industry decreased, while the export volume of major chemical products continued to grow. Customs data shows that in 2025, the industry's total import and export trade volume reached $902.01 billion, down 4.9% year-on-year, accounting for 14.2% of the nation's total import and export trade volume. Specifically, exports totaled $331.13 billion, up 2.5% year-on-year; imports totaled $570.88 billion, down 8.8% year-on-year; and the trade deficit stood at $239.75 billion, down 20.8% year-on-year.

Throughout the year, the industry's import and export trade volume fluctuated slightly but remained generally stable. Looking at specific products, import volumes showed divergence while export volumes grew at a relatively fast pace.

Regarding imports, in 2025, the country imported 579 million tons of crude oil, a year-on-year increase of 4.6%. The import trade value reached $295.447 billion, a year-on-year decrease of 8.7%. The crude oil import dependency ratio stood at 72.7%, an increase of 0.5 percentage points year-on-year. Annual natural gas imports totaled 128 million tons, down 12.9% year-on-year, with an import trade value of $56.989 billion, down 3% year-on-year. The natural gas import dependency ratio stood at 39.7%, down 2.3 percentage points year-on-year. Annual imports of liquefied propane totaled 28.662 million tons, down 2.2% year-on-year. Imports of polyethylene reached 13.407 million tons, down 3.2% year-on-year. Imports of polypropylene amounted to 2.119 million tons, down 10.1% year-on-year. Imports of methanol reached 14.431 million tons, up 6.9% year-on-year. ethylene propylene rubber imports totaled 1.468 million tons, down 9% year-on-year, while ethylene glycol imports reached 7.72 million tons, up 17.8% year-on-year.

Exports: In 2025, refined oil exports totaled 36.507 million tons, a year-on-year decrease of 0.7%. Organic chemical exports reached 34.647 million tons, a year-on-year increase of 15.6%. Pesticide exports amounted to 3.624 million tons, a year-on-year increase of 14.1%. Rubber tire exports will reach 9.289 million tons, up 3.3% year-on-year. Polyvinyl chloride (PVC) exports will total 4.461 million tons, surging 43.5% year-on-year. Terephthalic acid exports will amount to 3.817 million tons, down 13.6% year-on-year. Polyester exports will reach 7.921 million tons, rising 13.4% year-on-year.

7. Decline in Industry Investment

Data from the National Bureau of Statistics shows that in 2025, the cumulative fixed-asset investment in China's industrial sector increased by 2.6% year-on-year. Within this, investment in the mining industry grew by 2.5% year-on-year, while investment in the manufacturing sector increased by 0.6% year-on-year. From an industry structure perspective, investment growth slowed across major sectors. Cumulative fixed-asset investment in petroleum and natural gas extraction decreased by 5.1% year-on-year, with the decline widening by 3.3 percentage points compared to 2024. Cumulative fixed-asset investment in chemical raw materials and chemical products manufacturing fell by 8% year-on-year, reversing the 8.6% growth recorded in 2024.

2026: Balancing and Managing the “Four Key Relationships”

Fu Xiangsheng emphasized that 2026 marks the opening year of the 15th Five-Year Plan. Successfully navigating this inaugural year—through stable economic growth, strategic innovation deployment, and effective policy implementation—is crucial for achieving high-quality development and national rejuvenation goals over the next five years and beyond. The new year is projected to maintain a 5% economic growth rate, continuing to lead among major economies. For China's petrochemical industry, opportunities outweigh challenges and favorable conditions prevail over unfavorable factors amid global industrial restructuring, capacity adjustments, and the emerging effects of domestic anti-“internal competition” measures. The petrochemical market is poised to emerge from its prolonged “bottom-level stagnation,” potentially entering a “bottoming-out and recovery” phase to initiate a new cycle of prosperity.

Facing the new requirements for high-quality development in this new stage, and grounded in the current reality of the petrochemical industry—characterized by strong supply, weak demand, and prominent structural contradictions—it is essential to grasp and properly handle “four key relationships”:

First, the relationship between traditional industries and strategic emerging industries

Upgrade traditional industries to solidify the foundation for strategic emerging and future industries, enhancing the self-reliance and controllability of industrial chains. Implement high-quality development initiatives for key petrochemical chains and cultivate world-class petrochemical clusters to strengthen traditional industries' robust support for emerging and future sectors.

Second, the relationship between transitioning old and new growth drivers

Address the bottlenecks of massive annual exports of primary products and generic materials, while facing bottlenecks in import dependency for high-performance materials, premium membrane materials, and high-end specialty chemicals. We must manage the shift in growth drivers from “investment + exports” to “innovation + domestic demand.” Efforts should focus on meeting domestic demand through innovation, creating new domestic demand through innovation, and building endogenous momentum centered on the domestic economic cycle. By leveraging the robust driving force of innovation and the certainty of the domestic cycle, we can counter external uncertainties and enhance the overall competitiveness of the petrochemical industry.

Third: The Relationship Between Fossil Resources and Low-Carbon Resources

Prioritize and accelerate innovation in biomanufacturing technologies, key equipment, and high-efficiency microbial strains. Explore coupled innovation between biomass resources and fossil resources, expedite the application of biotechnology in petrochemicals, seize new opportunities from the technological revolution, and proactively develop future industries like biomanufacturing as new economic growth engines.

Fourth: The Relationship Between Optimizing Incremental Growth and Revitalizing Existing Capacity

Strictly control new capacity additions, resolutely eliminate increases in high-energy-consuming and high-emission products, and avoid low-level duplication in basic products and general-purpose materials. Focus new capacity expansion on high-end products. Strive for refinement in basic products and upgrading in general-purpose products, while intensifying innovation to extend, supplement, and strengthen industrial chains. Achieve high-end differentiation for existing products. Through “optimizing new capacity and revitalizing existing capacity,” realize effective qualitative improvement and reasonable quantitative growth.

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