Petrochemicals and polymers: Quarter two performance

Asia Pacific 

The petrochemical industry in Asia remained under significant pressure, exposed to persistent oversupply, subdued demand, and tightening margins across key value chains.  Volatile crude oil prices driven by geopolitical tensions and shifting OPEC+ policy shaped production costs but weak markets held the industry in a margin-constrained environment.  Seasonal demand offered limited support against critical challenges of structural oversupply, policy-driven trade uncertainty, and fragile economic climate.  

Ethylene and propylene margins continued to deteriorate, particularly for naphtha-based crackers and propane dehydrogenation (PDH) units.  Despite some cost relief from feedstock price reductions, downstream markets remained soft, with integrated producers bearing the brunt of margin compression. New capacity additions, particularly in China and Southeast Asia, outpaced demand growth and further exacerbated the supply-demand imbalance.  

Polyolefins markets were consistently long.  Surplus inventory, compounded by limited recovery in end-use sectors such as packaging, construction, and automotive, suppressed buying interest and drove margins toward breakeven or below. Aggressive exports from China and volatile trade policy added further complexity to regional trade dynamics.  

Aromatics markets, particularly benzene and paraxylene, were impacted by limited arbitrage opportunities, punitive trade tariffs, and adverse downstream economics.  Lengthy markets and narrowing price spreads between aromatics and feedstocks constrained profitability, prompting cuts to operating rates.  

United States 

Petrochemical markets in the United States weakened as slack demand in domestic and export markets impeded clearance of surplus supply.  Extensive changes in trade policy intended to promote domestic manufacturing faced prompt retaliation and adverse market sentiment curtailed operations.  Export cargoes faced stiff competition as punitive tariffs risked choking trade and supply was redirected from excessively lengthy markets in China.  Cost advantage of ethane narrowed as oil prices dropped to a four year low.  Margins were heavily compressed as the abrupt downturn of crude oil prices into quarter two guided prices in export markets favouring heavier feedstock from refineries.  Elevated freight costs depressed netbacks into lengthy export markets which in turn capped domestic prices.  The NexantECA petrochemical and polymer profitability index dropped 25 percent to post historic lows for a third consecutive quarter.  

Profitability of ethane crackers in the United States remained depressed through quarter two after falling heavily in the opening months of the year.  Abrupt downturn of crude oil and naphtha prices into April promptly depressed ethylene and derivative prices in other regions and derivative netbacks capped domestic ethylene prices.  Subdued demand in export markets, and reduced domestic cost advantage in the lower oil price environment restricted direct trade in ethylene.  Ethylene spot prices tumbled 25 percent to post a two year low.  Downturn of prices reflected slack derivative consumption from turbulent tariff policy, and falling ethane prices as exports to China risked suspension.   

Propylene markets in the United States weakened as adverse market reaction to the Trump administration’s “Liberation Day” tariff policy curtailed demand for durable goods.  Supply lengthened against subdued demand as refinery throughput increased to a five year high and little disruption to production was heard at propane dehydrogenation units or crackers.  Market pressures depressed propylene prices in the United States twenty percent across March and April Settlements, reversing a peak built in the opening months of the year.  Profitability of propylene extraction from refinery sources dropped sharply as high alkylation values restricted supply of refinery propylene, and weak derivative markets curbed demand and depressed prices for chemical and polymer grade material.  Propylene prices found a floor as upstream costs rebounded, and derivative margins remained resilient.  

Confidence in butadiene markets in the United States was hit hard by turbulent trade policy as adverse consumer confidence risked sales in the automotive sector.  INEOS announced closure of its Addystone, OH ABS plant in July which could consume around 33 000 tons per year of butadiene.  Discounting butadiene generated little incremental demand, and some producers had additional volume available for spot sales.  Freight rates to Asia heard in excess of $350 per ton offered minimal opportunity for export.  Margins on cracking heavier steam cracker feeds in The United States suffered severe pressure, and domestic supply of crude C₄ was accordingly restricted.  Import volumes loaded in quarter two dropped sharply to mitigate risk of unforeseen liability for turbulent tariff schedules.  

Western Europe  

Slack demand compromised petrochemical markets in Western Europe as turbulent tariff schedules posed a new risk to economic activity.  Abrupt downturn of crude oil prices moderated the feedstock cost burden on petrochemicals.  Extensive weakening of the Dollar against the Euro tested regional competitiveness and drew import cargoes displaced from excessively lengthy Asian markets.  Strengthening margins in the transition to a lower cost base briefly resisted consistent market pressures that continued to promote rationalisation of capacity. The NexantECA petrochemical profitability index increased to its highest for two years as monthly contract price settlements showed inertia to abrupt drop of upstream costs.    

Preference for domestic supply briefly supported petrochemical markets in Western Europe consumers mitigated risk of liability for uncertain tariffs.  Some consumers built stocks as crude oil prices slumped to find a floor at a four year low in early May.  Adverse sentiment in the global economic climate restrained activity of broader manufacturing industries and soon displaced early opportunistic upside.  Supply lengthened against slack demand as scheduled maintenance turnarounds completed.  Considerable weakening of the Dollar widened availability of import cargoes cleared from lengthy global markets towards Europe.  Sustained pressure on European markets prompted confirmation of wider capacity rationalisation.  

Crude oil prices plunged 20 percent into April following wide-ranging trade tariffs proposed by the Trump administration.  Brent prices found a floor approaching US$60/bbl as a more conservative approach to supply management suggested acceptance of a lower price point by the OPEC+ group.  Escalation of geopolitical tensions abruptly countered demand side pressures and a renewed risk premium led prices to rebound into June.  Cost of petrochemical feedstocks sourced from the refinery largely followed turbulent crude oil prices.  The lower price point for crude oil tested in April and May relaxed the feedstock cost burden for many petrochemicals.  Naphtha prices resisted seasonal strength in gasoline values alongside more subdued demand for petrochemicals.  Seasonal cost advantage in propane was capped as exports from United States were disrupted by turbulent trade policy.  

Ethylene markets in Western Europe initially strengthened as consumers favoured domestic supply to mitigate tariff risks amid global trade tensions.  Scheduled maintenance tightened supply as risk of liability for escalating tariffs periodically deterred import cargoes.  Production costs fell heavily as crude oil prices dropped to test a four year low.  Profitability of naphtha crackers rallied to a three-year high as inertia in contract price settlements and weakening Dollar slowed pass though of lower cost base.  

Propylene markets in Western Europe remained weak as polypropylene demand was more vulnerable to economic uncertainty following shock escalation of U.S. import tariffs.  Ample supply persisted, with imports from the East less impacted by tariffs.  Abrupt downturn of crude oil price coupled with seasonal cost advantage in propane revived profitability of on purpose propylene despite consistent market pressures.  Cash margins leapt 30 percent to a two year high approaching US$500 per ton in April and May.  

Butadiene demand in Western Europe remained weak as automotive industry reacted cautiously to economic uncertainty and risk of escalating tariffs.  OEM tyre demand declined and imports penetrated 75% of replacement tyre market.  Supply aligned with weak demand as lower cracker operating rates limited mixed C₄ availability.  A weakening Dollar tested competitiveness of European derivatives as Butadiene prices resisted easing costs and converged with ceiling previously set in China.  Profitability rallied to a three year high as prices resisted downturn in production costs.  

Weak consumption into styrene depressed benzene prices almost 50 percent over twelve consecutive months into May.  Profitability for conversion of toluene to benzene and xylenes was displaced as toluene costs firmed alongside gasoline blending values into the summer season.  Margins for integrated aromatics complexes settled at a three year low as reformer margins steadied and countered stubborn weakness in petrochemical markets.  

Middle East 

Petrochemical markets in the Middel East were vulnerable to adverse global economic climate spurred by turbulent global trade policy.  The business is fundamentally export focused and reluctant purchasing was a common theme across principal export markets.  Export cargoes from the Middle East faced stiff competition as excess supply in global markets sought narrowing opportunities.  Offers for FOB cargoes followed downturn of petrochemical prices in principal export markets.  Profitability faced further pressure as the downturn in crude oil prices narrowed cost advantage of feedstocks granted through long term supply agreements with steady nominal rates or defined discounts.    

Ethylene demand was curtailed as diminishing call on export cargoes capped consumption into derivatives.  Cost of ethane feedstock offered in Saudi Arabia increased 20 percent opening 2025 and cash cost of ethane crackers indicated floor to global ethylene costs near US$300 per ton.  Easing gas costs in the United States narrowed cost advantage of ethane crackers in Saudi Arabia to less than US$30 per ton through April and May.  Profitability of ethane crackers stagnated at a four year low, with cash margins settling near US$500 per ton as ethylene prices rolled over from quarter one.  

Propylene markets in the Middle East weakened as slack demand for export cargoes curtailed consumption into polypropylene.  Lengthening supply compounded fragile demand as several plants in Saudi Arabia restarted from scheduled maintenance turnarounds.  Propane lagged downturn of crude oil and naphtha values as China turned to the Middle East to mitigate risk of punitive tariffs and restrictions on propane imports from United States.  Propylene prices tracked steady production costs at propane dehydrogenation units as netback on incremental polymer exports was little changed.  Profitability stagnated at historic floor found in the closing quarter of 2024, with margins settling near cash cost breakeven.  

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Quarterly Business Analysis: Global - Petrochemicals, Polymers and C1 Chemicals – Q2 2025 

The Quarterly Business Analysis provides key insight into production economics for a broad range of commodity petrochemicals, polymers and C1 chemicals.  The analysis presents a review of costs, prices and margins for typical production assets, providing a valuable view of regional and value chain competitiveness and is is available for each key price setting region - Asia Pacific, recently added Middle East, Western Europe and the United States.  A quarterly report provides insightful commentary to illustrate current trends, related to recent market developments.  The accompanying database is updated monthly. 

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