Chinese Chemical Prices Hit Multi-Year Lows Amid Weak Demand and Falling Costs

Prices for most chemical products in China have plummeted to their lowest levels in years as of November 2025, driven by a combination of weak international demand and declining cost support, industry analysis shows.

The downward trend, which began in the second half of the year, has accelerated in the fourth quarter. Representative liquid chemicals—including olefins, aromatics, polyester, and coal-based products—specifically propylene, styrene, PTA, and methanol, all fell to new lows for the 2022-2025 period. By mid-November, products like propylene, styrene, and PTA showed tentative signs of a weak rebound from oversold conditions, while the methanol market remains entrenched in a prolonged bottoming process.

Weakening Cost Support and International Demand Drive Downturn

Two primary factors are depressing valuations for Chinese chemical products. First, a marked weakening of demand from other nations, combined with diminished cost support from crude oil, has placed significant pressure on the sector.

The global political, economic, and trade landscape shifted significantly in 2025 following the escalation of Sino-US trade friction after President Trump initiated a large-scale trade war early in the year, alongside ongoing Russia-Ukraine and Middle East geopolitical tensions. This led to a notable weakening in commodity demand from other nations, challenging China's strategy of exporting its excess capacity.

Concurrently, as geopolitical pressures eased, international crude oil prices gradually declined, contributing to an overall downtrend in chemical product valuations. By the second half of 2025, WTI crude was on a clear downward trajectory. Data indicates that the decline of the chemical industry index has been steeper than the fall in international crude oil prices.

Poor Economic Data and Fundamental Pressures Dampen Recovery Hopes

Current macroeconomic pressures, stemming from domestic economic fundamentals, strained Sino-Japanese relations, and demands from certain overseas firms to decouple supply chains from China, make a market turnaround unlikely.

Economic indicators, financial metrics, and PMI data collectively confirm a slowdown in China's growth momentum in October. Furthermore, the restrained language in China's latest monetary policy implementation report has significantly curtailed market expectations for interest rate cuts. Both the weak October macro data and a recent pullback in Chinese equity markets signal pronounced upward resistance.

The fundamentals of the chemical market face sustained pressure. Long-term, substantial capital expenditure during a previous major refining capacity expansion cycle drove production costs for some products below those of competitors in Japan, South Korea, and Europe. However, sustained high industry investment, coupled with persistently low or negative product margins, is now severely testing the sector's viability.

In the short term, the market navigates weak macroeconomic conditions and subdued demand. With limited prospects for substantial macroeconomic improvement and China entering its seasonal demand lull, significant demand growth appears unlikely. A shift in price trajectories would require stronger narratives from the supply side. Consequently, a clear inflection point for chemical product trends is unlikely in the immediate future. While the absolute prices of some products suggest limited further downside, the overall outlook remains subdued.

Market participants are awaiting the pivotal Politburo meeting in December to gauge whether policy expectations might shift.

Advisory: Key Events This Week Could Trigger Sharp Volatility

Following the conclusion of the US government shutdown, global markets face a cluster of major data releases and events this week, which could provoke significant turbulence. These include GDP and inflation figures from multiple nations and the release of the Federal Reserve's policy minutes.

Notably, on 18 November, Asian markets suffered across-the-board declines, signalling a rapid retreat in risk appetite. While markets had anticipated no Fed rate cut in December, reports have emerged suggesting no cuts may occur until the first half of next year.

Additionally, Japanese Prime Minister Sanae Takaichi's potential large-scale fiscal stimulus plan pushed Japan's 10-year government bond yield above 1.75%, nearing its highest level since 2008. This development could deliver a significant blow to global liquidity, and cautious market positioning is advised.