Global petrochemical firms face an oversupply crisis due to capacity expansion in China and high energy costs in Europe, leading to consolidation and asset sales.
Global petrochemical firms face an oversupply crisis, forcing them into survival mode due to years of capacity expansion in China and high energy costs in Europe. The crisis has led to consolidation among major producers, including asset sales, plant shutdowns, and strategic decisions to reduce carbon footprints. Key consolidation moves include ExxonMobil shutting down a steam cracker in France, Formosa Plastics operating only one out of three naphtha crackers, and Ineos acquiring TotalEnergies' 50% share in several businesses. The sector's weakness is concerning for the global oil industry, as petrochemicals maintain profits amid declining transportation fuel demand. Major producers are exploring growth markets and niche projects to produce low-carbon, recyclable plastics. The oversupply crisis is expected to continue for years, with 24% of global petrochemical capacity at risk of permanent closure by 2028.