Asia‘s Petrochemical Industry Explores New Paths for Sustainable Development

From May 15 to 16, the Asian Petrochemical Industry Conference (APIC) was held in Bangkok, Thailand's capital, delving into the challenges and opportunities facing the petrochemical industry under current conditions. The Asian petrochemical sector is currently mired in difficulties, with a challenging road ahead. Participants widely agree that persistent supply overcapacity and a global economic downturn caused by U.S. tariffs have become two major obstacles to industry development. Meanwhile, global megatrends such as geopolitical shifts, energy transition, and sustainability are profoundly reshaping demand patterns and the industrial landscape for petrochemical products.

Alexandre Ledecky, Vice President of Chemical Analytics at ICIS, pointed out that overcapacity, cost volatility, and regulatory changes constitute significant challenges for the petrochemical industry. Amid persistently weak demand, chemical companies worldwide are increasingly resorting to plant closures, particularly evident in Europe. Ledecky warned that without large-scale plant shutdowns, polyolefin overcapacity could continue until the mid-2030s, forcing numerous chemical enterprises into survival crises. He also predicted that the petrochemical industry may need to endure even tougher times before seeing a turnaround, with 2027 to 2028 potentially marking a turning point.

John Richardson, Senior Advisor at ICIS, further noted that underestimated new petrochemical capacity additions in Asia are another key factor contributing to global market oversupply. Currently, global polyolefin capacity significantly exceeds actual demand, further intensifying competitive pressures and developmental difficulties within the industry.

Despite numerous challenges, opportunities for development remain within the struggling Asian petrochemical sector. Bala Ramani, Director of Sustainability Consulting at ICIS and Strategic Advisor for Asia, stated that adaptation through plastic recycling and innovation might be an effective path for chemical companies to survive difficult times. Amid declining demand, chemical enterprises must actively adapt to evolving market conditions, with exploring plastic recycling and alternative feedstocks becoming critical directions.

Developing sustainable polyolefin businesses presents new opportunities for chemical companies, especially for integrated polyolefin producers who can leverage existing assets to create greater value. By adopting diversified production models, the polyolefin industry can not only reduce environmental impact but also meet increasingly stringent regulatory requirements and establish new value chains in resource-constrained environments.

Key pathways toward polyolefin circularity include mechanical recycling, pyrolysis-based recycling, and production using bio-based naphtha or other hydrotreated bio-based oils. Among these, pyrolysis shows promise as a vital complement to mechanical recycling in addressing plastic pollution. Polyolefin producers can also strategically adjust feedstock sourcing, technology, and process configurations to fully unlock the value of integrating pyrolysis oil.

However, Asia clearly lags behind Europe in developing sustainable polyolefins. Europe leads the field, aiming to produce over 13 million tons of sustainable polyolefins by 2040. In Asia, despite growing interest from markets such as India, Japan, and South Korea, fragmented policies hinder progress. Ramani noted that early initiatives by a few Asian markets and global brands, along with evolving yet scattered policies, have generated some momentum and opportunities. However, future market growth still depends on coordinated regulations and improved infrastructure development. Compared to the EU’s strict and unified regulatory framework, regulatory fragmentation across Asian countries makes it difficult to scale up the sustainable polyolefin market. Nevertheless, South Korea and Japan are actively creating conditions to stimulate demand for sustainable polyolefins. While initial investments in Asia may target developed markets like the EU, in the long term, investment focus will gradually shift toward local and regional markets. Projections suggest that if Asia adopts the EU’s recycled content targets, the region could unlock over 18 million tons of sustainable polyolefin demand by 2040.

Nonetheless, widespread adoption of alternative feedstocks and sustainable polyolefins still faces many barriers, including regulatory uncertainty, high costs, scalability issues, and inadequate infrastructure. Ramani emphasized that amid ongoing industry challenges, sustainable polyolefins have the potential to enhance overall industry resilience by improving resource efficiency, meeting compliance requirements, and creating new value through circular production models.