The report is divided into three parts.

Part One: Ethylene Market Analysis and Outlook

This section focused on the capacity, demand, and investment distribution of China's ethylene industry chain. For most of the recent years, the growth rate of ethylene supply has outpaced demand, leading to a decline in global ethylene operating rates. China's capacity will continue expanding until 2027, after which growth is expected to slow. Chinese ethylene crackers are shifting toward lighter feedstocks to enhance competitiveness. Against the backdrop of overcapacity and weak demand, outdated capacity faces the risk of elimination. The threats to the shutdown of Chinese crackers stem from policy and economic factors.  

Part Two: Ethylene Economics and Outlook

This section examined trends in energy and olefin feedstock prices. China's ethylene margins are the lowest globally, while its ethane cracking enjoys a clear profitability advantage. The naphtha cracking route is expected to remain unprofitable over the next three years. However, most ethylene derivatives have been either loss-making or barely breaking even in recent years, weighing down ethylene prices.  

Part Three: Analysis and Trend Outlook for Key Ethylene Downstream Markets

Currently, polyethylene investments are oversupplied, and Asian PE margins are projected to stay negative in the short to medium term. China's MEG capacity expansion slowed in 2024 but will continue until 2027, with more capacity likely to shut down due to poor economics. MEG has the lowest operating rates but will still maintain some level of imports. After a downturn, PE operating rates are gradually recovering, with import dependency declining year by year. As ethylene self-sufficiency improves, net imports of ethylene derivatives continue to decrease.