SunSirs: Market Insights into the Energy and Chemical Industry

According to the China Chemical Industry Weekly, an overview of the industry:

In April 2026, the energy and chemical industry was at a critical juncture characterized by ‘bottoming out of the cycle, structural reshaping and a green breakthrough’, presenting an overall operational landscape of ‘moderate recovery across the board, localized structural opportunities, and a coexistence of risks and opportunities’. As a foundational and strategic sector of the national economy, the industry encompasses core sub-sectors such as petrochemicals, natural gas chemicals, coal chemicals and fine chemicals. It spans the entire value chain from energy extraction and raw material processing to product manufacturing and end-use applications, providing essential support for industrial production and public welfare. Currently, the industry faces short-term challenges such as fluctuations in crude oil prices, divergences in supply and demand for production capacity, and geopolitical disruptions, whilst simultaneously embracing long-term opportunities including the deepening of green and low-carbon transformation, the empowerment of intelligent technologies, and the coordinated upgrading of industrial chains. Domestically, the sector has moved beyond the extensive model of “expanding capacity and competing on scale”, entering the deep waters of high-quality development characterized by “controlling volume and improving quality, green transformation, and breaking through in high-end markets”. Globally, whilst the pattern of loose supply and demand remains unchanged, regional divergence is intensifying. The Asia-Pacific region has become the core of capacity growth, whilst Europe continues to phase out capacity due to high energy costs and carbon constraints. Overall, the industry is steadily advancing towards greater efficiency, environmental sustainability, smart technology and diversification.

Insights into Industry Changes

Market Size Trends

Since 2026, the global energy and chemical industry has seen a steady recovery in market size. Driven by a slight rise in crude oil prices, a rebound in downstream demand and growth in the green chemicals sector, the industry maintained its recovery momentum throughout April. Based on real-time industry monitoring data and institutional forecasts, the global energy and chemicals industry market size is projected to reach US$6.1 trillion in 2026, representing a year-on-year increase of 5.2%. In April alone, the global market size was approximately US$0.53 trillion, marking a month-on-month increase of 2.1% compared to March and a year-on-year increase of 5.8% compared to April 2025. In terms of contribution by sub-sector, petrochemicals remain the industry’s core pillar, though their share continues to decline slightly; natural gas and coal-based chemicals are growing at rates significantly higher than the industry average, whilst fine chemicals, leveraging their high value-added advantages, continue to increase their market share, becoming a key driver of industry growth.

Changes in the Industrial Chain Landscape

Fluctuations in Upstream Raw Material Prices and Supply Conditions

In April 2026, the upstream raw materials market for the energy and chemicals sector exhibited a pattern of ‘price divergence and tight supply’, with prices of core raw materials fluctuating significantly due to factors such as geopolitical tensions, plant maintenance, and supply-demand mismatches. Regarding crude oil, ongoing geopolitical tensions in the Middle East have led to production cuts of over 9 million barrels per day in countries such as Saudi Arabia since March, driving crude oil prices up slightly in April and keeping them at elevated levels. The average price of Brent crude in April is expected to fluctuate within the range of US$68–72 per barrel, representing an increase of approximately 3.5% compared with March; On the supply side, US shale oil production has remained stable, whilst OPEC+ has maintained a policy of moderate production cuts. Coupled with geopolitical uncertainty in the Middle East, this has led to localized tightness in crude oil supply. Domestic crude oil imports increased by 2.8% month-on-month compared to March, primarily to meet demand from the refining and petrochemical sector.

Regarding natural gas, global LNG supply remained stable in April, primarily driven by capacity expansions in North American gas projects. Steady recovery in LNG demand across Asia pushed domestic LNG prices up by 2.1% month-on-month compared to March, though they remained below the levels seen during the same period in 2025; As for coal, global supply remained ample, with prices remaining stable or trending downwards. The average domestic thermal coal price in April was 920 RMB/ton, a 1.1% decrease from March, whilst the continued development of the coal chemical industry provided stable demand support for coal. Furthermore, the domestic chemical market witnessed a widespread wave of price suspension announcements in April, with over 200 major enterprises, including Shandong Haihua and Jingbo Petrochemical, successively suspending quotations for dozens of core chemical products such as bromine, epoxy resin and pure benzene. This was primarily driven by concentrated spring maintenance of production facilities and heightened volatility in upstream costs, resulting in tight market supply and a strong wait-and-see sentiment. Among these, the suspension of quotations was most concentrated in sectors such as bromine and phosphorus chemicals, where the tightening of supply was particularly evident. Prices for certain specialized raw materials rose significantly; in the first quarter, the average price increase for core coating raw materials exceeded 55%, with trimellitic anhydride seeing the largest increase of over 220%, and prices remained at high levels throughout April.

Changes in Downstream Demand

In April 2026, downstream demand in the energy and chemicals sector exhibited a pattern of ‘recovering traditional demand and robust emerging demand’, with marked divergence across various downstream sectors. In the transport sector, which remains the primary source of demand for petrochemical products, domestic demand for petrol and diesel in April increased by 3.2% month-on-month, primarily driven by higher travel demand during the Qingming Festival holiday. Demand for jet fuel continued to recover; coupled with the accelerated promotion of green jet fuel following the restructuring of Sinopec and China National Aviation Fuel Group, jet fuel demand rose by 5.1% month-on-month. Meanwhile, the promotion of alternative energy sources such as biofuels and hydrogen is driving a gradual optimization of the downstream energy consumption structure.

In the construction sector, driven by the recovery in domestic infrastructure investment and the spring construction peak season, demand for chemical products such as plastic building materials, coatings and adhesives grew steadily in April, rising by 4.3% month-on-month. Notably, demand for green and environmentally friendly products (such as low-VOC coatings and biodegradable plastics) grew significantly faster than that for traditional products, reaching 8.5%. In the electronics sector, demand for fine chemical products (such as electronic fluorinated liquids and perfluoropolyethers) grew rapidly, gradually penetrating the semiconductor and data centre thermal management markets, with demand in April rising by 6.2% month-on-month. In the new energy sector, demand for chemical materials such as lithium-ion battery electrolytes, separators and cathode materials remained at a high level, rising by 3.8% month-on-month in April, which in turn drove demand growth in the coal chemical and fine chemical sectors. Furthermore, the sharp rise in paint raw material prices during the first quarter prompted downstream paint manufacturers to adjust their prices; in April, the paint industry exhibited a pattern of ‘demand supported by essential needs and procurement based on actual requirements’, which further stimulated the release of demand for upstream fine chemical raw materials.

Changes in Industry Policy

In April 2026, policy in the energy and chemical industry continued to focus on four core areas: “green and low-carbon development, energy conservation and carbon reduction, safety and environmental protection, and industrial quality enhancement”. Domestic and international policies worked in concert, with regulations becoming increasingly stringent and detailed. Domestically, on 22 April 2026, the General Office of the CPC Central Committee and the General Office of the State Council issued the ‘Opinions on Advancing Energy Conservation and Carbon Reduction to a Higher Level and with Higher Quality’, explicitly calling for a comprehensive improvement in energy efficiency across key sectors such as petrochemicals and chemicals. The document advocates for the in-depth implementation of energy conservation and carbon reduction diagnostics, the organization and implementation of a series of industrial energy conservation and carbon reduction projects, the promotion of cross-departmental coupling and efficiency gains (such as integrated refining and petrochemicals), and the advancement of overall optimization of industrial park energy systems alongside the intensive, economical and circular use of resources. Concurrently, the policy stipulates the improvement of laws and regulations on energy conservation and carbon reduction, the acceleration of amendments to the Energy Conservation Law and the Renewable Energy Law, the refinement of energy consumption and carbon emission quota standards for key industries, the strengthening of policy support for energy conservation and carbon reduction, the study and improvement of differentiated electricity pricing policies for key industrial sectors, and the implementation of tax incentives conducive to energy conservation and carbon reduction.

At the local level, entry thresholds for chemical industrial parks continue to rise, with the rectification of small-scale chemical enterprises deepening. Full-process automation upgrades for enterprises employing five high-risk processes are being comprehensively advanced, significantly enhancing intrinsic safety levels. The Ministry of Ecology and Environment has mandated that key chemical enterprises reduce their carbon intensity by an average of 3.5% annually, with carbon emission quotas being further tightened. Compliance costs for high-energy-consumption and high-emission enterprises have risen sharply, and outdated production capacity faces the risk of shutdown. Internationally, the European Union continues to advance the Carbon Border Adjustment Mechanism (CBAM), imposing carbon tariffs on imported energy-intensive chemical products, thereby compelling global energy and chemical enterprises to enhance their low-carbon performance; US policies continue to favor the oil and gas sector, providing more exploration and development licenses and lifting restrictions on LNG exports to support the development of US petrochemical enterprises. Consequently, the policy environment for the global energy and chemical industry is showing signs of regional divergence.

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