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Currently, Asia continues to add production capacity, resulting in an oversupply of petrochemical products worldwide, while weak demand persists. Petroleum and chemical companies are forced to confront real-world challenges through integration and restructuring due to declining profit margins and operating losses. Recently, Alex Leadbeater, vice president of ICIS and head of chemical analysis, said that the global petrochemical market is unlikely to recover in the short term, and companies need to acknowledge the necessity of restructuring. He pointed out: “Petroleum companies must make difficult decisions and adjust their scale accordingly.” ” Taking Korean companies as an example, although the restructuring talks are not yet complete, they have agreed to cut the production capacity of their naphtha cracking centers (NCCs) by up to a quarter. To date, HD Hyundai Chemical and Lotte Chemical are finalizing a business restructuring plan to integrate the naphtha cracking center at the Daisan Industrial Complex into a joint venture in order to reduce ethylene production. Other companies are still discussing reorganization plans, and the South Korean government requires that such plans be submitted by the end of the year. Meanwhile, industry consolidation is also advancing simultaneously to optimize operations. Some companies, such as Lotte Chemical, plan to transition from basic chemicals to the field of specialty chemicals. However, Lidbeck said that such investments in reducing overall production capacity for long-term growth may only be feasible for large enterprises. Not all specialty chemicals can be truly profitable, as the costs of research and development, production, and approval are high, and all these processes take time. Another issue of concern in the market are trade barriers. The implementation of U.S. tariffs, ongoing geopolitical tensions, and other short-term uncertainties cast a shadow over economic growth in 2026. The International Monetary Fund (IMF) predicts that the economic growth rate of the G20 countries will remain at 3.2% in 2025, dropping to 3.0% in 2026 – figures that are lower than the 3.2% estimated for 2024 and 3.4% in 2023. The IMF stated in its report on November 19: “Both the developed economies within the G20 and the emerging market economies are expected to see their short-term growth rates remain significantly below historical averages.” ” ICIS analyst Lina Xu said that other trade barrier risks also exist. As exports of petrochemical products increase, Chinese goods are also becoming targets of tariffs. Although India has revoked the quality control order, its government is still finalizing anti-dumping duties (ADD) on various products such as polyvinyl chloride (PVC). Meanwhile, affected by the 50% tariffs imposed by the United States on Indian goods, India’s exports declined by about 12% on a year-on-year basis, and the removal of quality control requirements will turn India into a larger importer. The continuous expansion of global petrochemical capacity from 2025 to 2026 is not good news for global petrochemical companies. At present, aside from a few regions such as India, demand remains weak in most economies, and major economies such as the United States are facing the problem of rising debt levels, a situation that is unlikely to improve in the short term. Lidbeck said, “During the financial crisis, governments injected trillions of dollars to stimulate the economy, but that won’t happen again now.” Even if demand recovers healthily next year, the current severe overcapacity will make it difficult to improve profit margins. ” The combination of these factors makes restructuring more urgent in the medium term; given the ongoing poor profitability of these companies, they need to bear short-term losses. Lidbeck emphasized that old assets must be shut down before capacity issues are resolved and profit margins recover. However, he expressed doubt about the claim made by some companies earlier that demand would recover by 2028. Lidbeck pointed out that any recovery in demand must be preceded by the closure and rationalization of production capacity, just as China and South Korea are doing.