China petrochemicals: 2019 review and 2020 outlook

China is the biggest petrochemical-producing country in the world. Its position as top producer will strengthen with massive investment in the olefins and aromatics chains, driven by demand growth and support from the government. The escalating trade war between China and the US over the past year has seriously damaged market confidence. China’s rapid economic growth is losing pace. In 2020, China will see a wave of new capacity coming online from some mega refinery and petrochemical complexes. This supply surge coupled with a weakening economy will create severe challenges for China’s petrochemical market. We expect chemical commodity prices to drop further and production margins will continue to be squeezed. In this insight, we will focus on China’s olefins, polyolefins and paraxylene (PX) markets as these three petrochemical commodities have been the subject of the fore-mentioned capacity overbuild.