China's C2 Industry Chain Sees Capacity Expansion and Technological Breakthroughs Amid Market Pressure in 2025

The year 2025 proved highly volatile for China's chemical industry. Prices for a wide range of chemical products fell below historical lows, while only a limited number of products achieved growth and profitability. Chemical segments closely linked to the real estate sector remained under sustained pressure, with prolonged contraction evident across multiple products within the C2 industry chain. Against this backdrop, a review of key developments in 2025 provides important insight into market trends and the outlook for 2026.

China Becomes the World's Largest Ethylene Producer

By the end of 2025, China's total ethylene production capacity exceeded 62 million tonnes per year, representing a year-on-year increase of 19% and accounting for approximately 25% of global capacity. This expansion propelled China past the United States to become the world's largest ethylene producer.

The rapid growth in ethylene capacity has also elevated China to leading positions across several downstream sectors, including polyethylene, PVC, ethylene oxide, and ethylene glycol.

Several major ethylene projects were commissioned during the year. On 27 October 2025, CNPC's Guangxi refining and petrochemical integration project reached full operation, adding 1.2 million tonnes of ethylene capacity and 3.06 million tonnes of downstream chemical products. On 15 July 2025, ExxonMobil's wholly US-owned 1.6 million tonne ethylene project at Daya Bay, Guangdong, commenced operations, featuring multiple high-performance polyethylene and polypropylene units dominated by metallocene products, significantly advancing the scale and sophistication of China's metallocene polyethylene sector.

Construction also progressed on new projects. On 28 May 2025, the third phase of the 1.6 million tonne ethylene project jointly developed by CNOOC and Shell in Huizhou broke ground. The project includes 16 downstream chemical units and is scheduled for completion and commissioning after 2026, with a significant impact on Guangdong's overall ethylene capacity expansion.

Additional milestones included the successful start-up of Wanhua Chemical's 1.2 million tonne ethylene Phase II project on 3 April 2025, featuring downstream capacities of 250,000 tonnes of LDOE and 400,000 tonnes of POE, supporting the large-scale expansion of the POE industry. On 5 November 2025, BASF's 1 million tonne ethylene complex in Zhanjiang entered production, incorporating 500,000 tonnes of polyethylene, ethylene oxide, and diethylene glycol capacity and becoming BASF's third-largest integrated site worldwide.

In July 2025, Xinjiang Tianye commissioned a 104,000-tonne ethanol dehydration-to-ethylene plant, the first and largest of its kind in China, using technology developed by Tianjin University.

Breakthroughs in Ethylene Production Technology

China achieved several notable technological advances in ethylene production in 2025. Xinjiang Tianye's ethanol dehydration-to-ethylene facility achieved stable operation with ethylene purity reaching 99.96%, marking a significant breakthrough in non-petroleum-based ethylene production.

Meanwhile, the Dalian Institute of Physical Chemistry of the Chinese Academy of Sciences reported progress in coal-based acetylene electrocatalytic semi-hydrogenation to ethylene. By optimizing electrode structures and controlling copper particle spacing, the project achieved efficient conversion at ampere-level current densities, opening new pathways for reducing dependence on petroleum feedstocks.

Equipment manufacturing also advanced. Guangxi Petrochemical commissioned the world's largest dual-frequency converter motor with disturbance-free switching, used to power ethylene refrigeration compressors, demonstrating China's growing capabilities in domestic production of core ethylene equipment.

Advances in Polyethylene Technology

Significant progress was recorded in polyethylene technology during 2025. CNPC's self-developed PME-18 metallocene catalyst achieved its first long-term industrial application under condensed-phase conditions at Daqing and Lanzhou Petrochemical. At the same time, the fourth-generation non-bridged metallocene catalyst developed by Sinopec Shanghai Research Institute was applied at Zhongke Refining & Chemical's 200,000-tonne polyethylene unit, breaking long-standing foreign monopolies.

In October 2025, Puren Crystal's 140,000-tonne-per-year ultra-high-purity, high-molecular-weight polyethylene plant commenced operations, using an independently developed ultra-high-purity slurry process to produce ultra-thin lithium battery separator materials, filling a domestic technology gap.

Further breakthroughs included the successful start-up of a 40,000-tonne continuous ultra-high molecular weight polyethylene unit at Pucheng Clean Energy, jointly developed by the Shanghai Institute of Organic Chemistry of the Chinese Academy of Sciences and Sinopec. In February 2025, Shandong Dongming Petrochemical commissioned a 300,000-tonne polyolefin elastomer facility using a nickel-based catalyst developed by the University of Science and Technology of China, enabling direct synthesis using ethylene as the sole feedstock.

In addition, Tianjin University developed a tetrapolyethylene product that significantly reduced haze and improved light transmittance, gaining recognition in high-end packaging and achieving domestic substitution.

Polyethylene Capacity Reaches a Record High

China's total polyethylene production capacity surpassed 45 million tonnes in 2025, a new historical high. More than 8 million tonnes of new capacity were added during the year, with over 5.9 million tonnes successfully commissioned. Capacity expansion was largely driven by extensions of existing facilities, contributing to rising industry concentration, with the CR5 ratio for LLDPE exceeding 58%.

Key projects included Wanhua Chemical's 600,000-tonne HDPE unit at its Yantai base, which achieved first-time start-up on 28 February 2025 using proprietary gas-phase technology. Construction also advanced on the 400,000-tonne HDPE unit supporting the Sinopec–Saudi Aramco ethylene project, expected to become the world's largest base for high-end bimodal HDPE.

Other notable developments included ExxonMobil's Huizhou project with two high-performance polyethylene units, BASF's Zhanjiang integrated base polyethylene expansion, PetroChina Guangxi Petrochemical's 700,000-tonne full-density polyethylene unit, and multiple UHMWPE and HDPE facilities across Guangxi and Jiangsu.

Ethylene Oxide and Ethylene Glycol Capacity Expands Further

In 2025, China's ethylene oxide production capacity exceeded 10 million tonnes per year for the first time, following the commissioning of Jilin Petrochemical's 300,000-tonne EO unit on 27 October. Capacity rose 18% year-on-year, making China the world's largest EO production base. Ethylene glycol capacity simultaneously surpassed 34 million tonnes, with more than 2.6 million tonnes of new capacity added, accounting for over half of global capacity growth.

Technological progress continued, including the installation of the world's largest EO/EG scrubber tower at the Gulei ethylene project and the successful application of Sinopec's YS-9010 silver catalyst, achieving 89.7% selectivity and enabling domestic substitution.

Demand growth was notable in pharmaceuticals, power battery separators, and high-end applications. Coal-based ethylene glycol output exceeded 51% of total production for the first time, overtaking ethylene-based routes. Major coal-to-ethylene glycol projects advanced, including the filing of Xinjiang Zhongkun's 1 million tonne project and the commissioning of new facilities in Sichuan and Shandong.

Market Pressure Persists Despite Structural Growth

Industry analysts note that by 2025, key products across China's C2 industry chain had achieved sustained growth in scale, with several products reaching world-leading capacity levels. R&D breakthroughs translated into tangible gains in high-end product development, energy efficiency, and emissions reduction.

However, structural imbalances remain pronounced. By 2025, prices of polyethylene, ethylene oxide, and ethylene glycol had fallen to their lowest levels in more than a decade, with most products experiencing persistently weak market conditions throughout the year.