By John Richardson
I BELIEVE THE JURY is back with its verdict. China’s economy is going through a long-term, structural downturn during a period when we are facing much-increased uncertainty over the extent to which it will be able to use exports as compensation for weaker-than-expected domestic growth.
So, let me for the purposes of this blog not debate the issues any further. Let us instead take the above assumptions as a given, on the basis that we can’t afford to waste any more time discussing the issues. Maybe in the long-term things can change. But this can’t happen in 2025.
Let’s next stare the very alarming ICIS polymers data straight in the face, rather than hide beneath the covers, and consider how producers should respond.

In seven of the major synthetic resins, China’s capacity exceeding demand is estimated by ICIS to have undergone big increases from 2021 (the year of the Evergrande Turning Point) until 2024. We see this continuing in 2025 to new record highs.
If I were to look at the data up until 2030, we would see further increases in capacity exceeding demand in some of the polymers. But let me here just stick to the world until the end of 2025. I will consider the longer-term in later posts.
So, what to do in 2025 if you are a producer?
Here’s the first of two slides summarising what you need to do with the details immediately below

Good Startup, Shutdown and Production Data has become Gold Dust
Capacity scheduled to come on-stream this year might be delayed until 2026. The first piece of advice is therefore to keep in touch with every scrap of start-up date and analysis from ICIS and your network.
Capacity is not the same as production. The following questions will need to be answered to estimate production. How will cost-per-tonne economics shape up? What will domestic consumption be like? To what extent will China be able to export its surpluses directly as polymer exports and indirectly as packaging for or components of finished goods?
“Come on, don’t tell me the blatantly obvious,” you might say. No. In the old Supercycle world, tracking the minute details of China’s plant start-ups and production levels wasn’t as critical as it is today.
Equally, of course, because we are in the midst of the chemical and polymer industries’ worst-ever downturn, you will need to effectively monitor how much capacity permanently shuts downs in disadvantaged regions such as Europe and South Korea.
Stay ahead on Tariffs and Trade Policy Changes
Being aware, ahead of your competitors, of the opening of new antidumping and safeguard investigations, and the timing of the imposition of duties during these investigations, is going to be another critical success factor. So will timely awareness of changes to standard import duties.
Multilateral free-trade deals could well accelerate as we move towards a more regionalised chemicals world. So could bilateral-trade deals under the Trump administration, as The Art of the Deal shapes economic as well as geopolitical relationships between the US and other countries.
One example of the ambiguity and complexity surrounding Trump’s second term was highlighted by CNN’s Fareed Zakaria in this 18 January interview with Erin Burnett.
“Trump is a unique figure in American politics as he can change his mind on anything, and his base doesn’t care,” he said,
He was referring to Trump wanting to use an executive order to delay the US ban on TikTok, and how this could point to Trump being the dove on China “despite an administration of hawks”. Zakaria added that Elon Musk, Trump’s senior advisor, had very close and positive relationships with China.
So, be prepared for anything from better US trading relationships with China to a major trade war and anywhere in between.
How much quality intelligence do you have on antidumping and other duties? Do you possess an understanding of what’s happening in multi – and bilateral trade negotiations and how different outcomes could shape chemicals trade flows? Do you spend enough time and money on these areas? If not, then I suggest you should.
Equally important could be how effective you are in lobbying your governments in the event of increased competition from Chinese polymer imports or even just imports at the same levels as last year. In PP, China’s total exports just for January-November 2024 came to 2.2m tonnes versus 1.3m tonnes for the whole of 2023. As recently as 2021, China’s exports were just 425,000 tonnes.
Don’t overlook analysis of the value of currencies. Again, currency analysis has always mattered, but it is more important today because of the range of potential outcomes resulting from the Trump presidency.
The conventional wisdom is that the US dollar will continue to strengthen during 2025. For other currencies, most importantly the Yuan, this might counteract any higher import tariffs imposed by the US.
But Duncan Weldon in this 18 January Financial Times article argued the following:
- The imposition of higher tariffs, while initially strengthening the dollar by reducing imports and increasing trade friction, could weaken the economy in the long run, ultimately leading to lower interest rates and a softer currency.
- Trump’s rhetoric about desiring a weaker dollar may not be mere posturing. He could use the threat of tariffs as leverage to negotiate a multilateral agreement to devalue the dollar, similar to the 1985 Plaza Accord.
- Research suggests that countries hold reserves in the currency of nations that provide them with security guarantees. If the US begins to withdraw its global security commitments, its share of international reserves could decline, weakening the dollar.
Here’s the second slide summarising what else you need to do with the details again described in detail below.

But in this Increasingly Muddled World, the Muddle isn’t just about China
In a 15 January ICIS Think Tank podcast, Nigel Davis, Paul Hodges and I discussed how the Israel-Gaza ceasefire might lead to the re-opening of the Red Sea route in the Suez Canal, if the knock-on effect of the ceasefire leads to an end to the Houthi attacks on shipping. It has also been suggested that US pressure on Iran, which supports the Houthis, will increase under the new Trump presidency.
But an 18 January article in The Economist argued that regardless of any shift in geopolitics, Houthi disruption to trade via the Suez Canal could continue. The newspaper made the following points:
- Unlike other Iranian-backed groups that have suffered setbacks, the Houthis remain resilient due to Yemen’s harsh terrain, persistent instability, and their ability to adapt. Past military interventions, including a failed Saudi-led campaign and recent US-Israeli strikes, have inflicted damage but failed to neutralise them. Their survival is partly due to Iran’s continued military support, including missiles and intelligence assistance, though they have also developed independent sources of funding.
- The Houthis’ extortion model forces Western firms to take longer, costlier routes, while some non-Western players, like China, are engaging in negotiations for safe passage. Despite the prospect of US pressure on Iran under a Trump presidency, the Houthis are likely to persist, even independently of Tehran. If countries increasingly opt to pay protection money rather than confront them, global trade patterns will shift, embedding persistent risks into financial and shipping markets. Their success could inspire other militant groups to adopt similar tactics, reshaping global security and commerce.
You should be prepared for a scenario where the disruptions to trade via the Suez Canal continues. And as The Economist warned “Their success could inspire other militant groups”.
Do you spend enough time and money on understanding the geopolitical impact on polymer trade flows? The same questions apply to the short-term implications of climate change (let’s leave the long-term implications for another day).
Climate change isn’t some distant challenge but is instead affecting the “here and now” of chemicals markets because of increasingly erratic weather patterns.
During India’s monsoons, for example, PVC demand and pricing tend to dip because construction slows down with demand and pricing picking up after the monsoons. Downpours during the monsoons have become heavier and more unpredictable because of the increase in moisture in the atmosphere. Does this mean a change to the long-term historical pricing patterns for PVC in India?
Studies by the Indian Institute of Tropical Meteorology and the Intergovernmental Panel on Climate Change (IPCC) indicate that increased monsoon volatility threatens food security, as crops such as rice and wheat depend on consistent rainfall.
Additionally, irregular monsoons strain water resources, affecting drinking water supplies and hydropower generation. The economic consequences are severe, as over half of India’s workforce depends on agriculture, which remains largely rain-fed. Without improved water management and climate adaptation strategies, the instability of monsoons will continue to challenge India’s economic and environmental sustainability.
In other words, what will India’s economic growth be like in 2025, and thus its polymers demand, now that climate change is reshaping its economy? Can we do a control experiment whereby we look at growth would have been in India without climate change?
Climate change has significantly affected shipments through the Panama Canal, primarily due to prolonged droughts that have reduced water levels in Gatún Lake, the canal’s primary water source.
Lower water levels have forced authorities to impose restrictions on vessel size, weight, and daily transit capacity, leading to delays, increased shipping costs, and supply chain disruptions. In 2023 and 2024, severe droughts caused by El Niño and rising global temperatures led to a reduction in the number of daily ship transits, forcing many vessels to reroute around South America or seek alternative shipping methods.
Modelling complexity and saving time and costs through Artificial Intelligence
We are in a post-Supercycle world of far greater complexity. But AI – which is as significant a technology as other” general technologies” such as steam power, electricity and the internet – means we can model increased complexity. AI can also equal major time and so cost savings during the downturn.
In this excellent FT AI in the Workplace video, journalist Isabel Berwick said that CEOs admitted that they had done the equivalent of “buying Ferraris for their employees [state-of-the-art AI access] without giving them driving lessons”. Two-thirds of desk-bound workers were not using AI at all, according to the same video.
Watch this space as I experiment with AI (I am giving myself driving lessons). Let’s discuss how AI can transform your chemicals business.