Challenges and Opportunities Coexist: How the Asian Petrochemical Industry Can Break Through

At a time of profound transformation in the global economy and industrial landscape, the Asian petrochemical industry stands at a crossroads. Recently, at the 2025 Asia Petrochemical Industry Conference, participants unanimously agreed that the industry is facing unprecedented and complex challenges, with drastic shifts in the global landscape creating significant uncertainty for its development. However, within this crisis lie opportunities, with sustainability, innovation, and regional cooperation emerging as key focal points—factors crucial to whether the Asian petrochemical industry can achieve continued prosperity.

Interwoven Challenges

Currently, the Asian petrochemical industry faces a series of intricate challenges, like layers of dark clouds hanging over its development. The spread of trade protectionism has become the primary issue. Hiroichiro Kudo, Chairman of the Japan Petrochemical Industry Association, stated bluntly that the prevalence of protectionist policies has cast a heavy shadow over global economic activity. Rising geopolitical risks, frequently fluctuating tariff policies, pressing economic security concerns, and increasingly frequent natural disasters caused by climate change have all delivered major shocks to the petrochemical sector. In Japan, ethylene plant operating rates have remained below 90% since May 2022, recently dropping to around 80%, placing the industry in an extremely severe situation.

Economic volatility has also placed immense pressure on the petrochemical industry. Unstable global economic conditions make market demand difficult to predict, causing sharp fluctuations in petrochemical product prices and introducing great uncertainty into corporate operations. Supply chain instability has become another major challenge, as persistent oversupply and global supply chain restructuring lead to unstable raw material procurement, further exacerbating business difficulties. If downstream industries weaken due to tariff shocks or other factors, the growth momentum of the petrochemical industry will be significantly affected.

Moreover, rising societal expectations for environmental responsibility have placed the petrochemical industry under unprecedented environmental pressure. For years, pollutants such as exhaust gases, wastewater, and solid waste generated during production have caused certain damage to the ecological environment. Today, with growing public environmental awareness and increasingly stringent environmental regulations, the petrochemical industry must actively take measures to reduce emissions and achieve green, sustainable development.

Rise of the South Asian Market

Against the backdrop of an overall crisis in the Asian petrochemical industry, the emergence of South Asian markets offers new hope. Shekhar Balakrishnan, Secretary General of the Indian Chemicals and Petrochemicals Manufacturers' Association, noted that India, as a rising large market in Asia, has become a "beacon of growth" in petrochemical demand, driven by its thriving end-use industries.

In recent years, India's rapid economic growth has positioned it as one of the world's fastest-growing economies. The strong rise of end-use sectors such as automobiles, infrastructure, and construction has laid a solid foundation for the petrochemical industry. The substantial demand from these sectors has elevated India's petrochemical industry to new heights. Balakrishnan stated that India's petrochemical sector has entered a new phase of growth. Currently, Hindustan Petroleum Corporation plans to commence commercial operations this year at its integrated refining and petrochemical facility in Barmer, Rajasthan, in western India, which will produce 820,000 tons of ethylene and 400,000 tons of propylene annually.

Notably, while pursuing economic growth, India also places special emphasis on environmental responsibility. Balakrishnan emphasized that India’s petrochemical industry is actively embracing the circular economy, particularly in the field of polymers. For example, India now recycles over 90% of polyethylene terephthalate (PET) bottles into high-value products, helping address the global materials waste crisis while creating vast opportunities for reuse and recycling.

Collaborating to Forge a New Path

Facing an unprecedented crisis, the Asian petrochemical industry deeply recognizes that regional cooperation and innovation are key to overcoming current challenges. Shin Hak-jae, Chairman of the Korea Chemical Industry Association, described the current petrochemical market as an "unprecedented crisis marked by global oversupply, weak demand, and widespread trade conflicts," stressing that tighter regional solidarity and cooperation are more critical than ever amid increasing uncertainty in the global trade order—essential for ensuring sustainable industry growth.

Barrin Asmawi, President of the Malaysian Petrochemical Association, also stated that in addressing global challenges ranging from climate change to economic volatility, the petrochemical industry should be at the forefront of providing solutions for balanced growth, sustainability, and social progress. Malaysia’s petrochemical sector is implementing initiatives based on the National Energy Transition Roadmap and the New Industrial Master Plan 2030, increasing investments in carbon capture, utilization, and storage (CCUS), green hydrogen, and bio-based feedstocks, while accelerating the adoption of renewable energy in production and chemical recycling. At the same time, Asmawi emphasized the indispensability of collaboration, proposing that member countries of the Asia Petrochemical Industry Conference join forces to tackle trade policy challenges and secure better negotiation outcomes through regional cooperation.

Henry Nejad, President of the Singapore Chemical Industry Council, introduced that Singapore is actively advancing the transformation of its petrochemical industry in line with the Singapore Green Plan 2030 and the national goal of achieving net-zero emissions by 2050, developing Jurong Island into a sustainable energy and chemicals hub focused on sustainable products, sustainable production, and carbon capture and utilization (CCU). Meanwhile, Nejad highlighted the importance of regional cooperation through initiatives such as the ASEAN Regulatory Cooperation Platform, which helps address non-tariff barriers and fosters a favorable business environment.