China’s expansion of its petrochemical capacity is putting strong pressure on other Asian countries, particularly Japan. In Japan, four ethylene cracking units are expected to shut down, reducing the number of operating facilities from 12 to 8 and cutting capacity by nearly 30%. Similar reductions are also being observed in South Korea, the Philippines, and Southeast Asia.
Major Japanese companies such as Asahi Kasei, Mitsubishi Chemical, and Mitsui Chemicals have announced joint projects to consolidate production, including the closure of older facilities and the concentration of operations in more efficient plants. The total reduction in Japan’s capacity is expected to reach about 1.75 million tons per year. The reasons include a combination of weak domestic demand and rapidly growing supply from China, which has pushed operating rates below profitable levels. Meanwhile, China is expanding its ethylene capacity at a record pace, transforming itself from the world’s largest importer into a global producer and supplier.
Similar pressure is being felt in Europe and other Asian countries, where significant shutdowns are planned or already underway. In Europe, seven crackers with a combined capacity of about 4 million tons are scheduled to close between 2024 and 2027. In South Korea, operator Yeochun NCC has already shut one unit and is considering a full shutdown. The Philippines’ JG Summit Olefins idled its cracker last January, while in Singapore ExxonMobil is expected to close the older of its two plants in March. In Japan, however, the cutbacks are also part of a broader strategy toward carbon neutrality, including investments in technologies for producing chemicals from biobased feedstocks, with joint production planned to begin in 2034.