APIC ’25: INSIGHT: Asia petrochemical industry facing “unprecedented crisis”

BANGKOK (ICIS)–Asia’s petrochemical industry leaders are navigating a complex global landscape marked by unprecedented challenges, with a renewed focus on sustainability, innovation, and regional collaboration, industry leaders said on Friday.

• Oversupply, sluggish demand, trade conflicts weigh on industry
• Challenges open doors for transformation through digital innovation, efficiency
• Protectionist trade policies cast shadow over global economic activity

Facing economic volatility, supply chain disruptions, and increasing environmental demands, top executives from across the region attending the Asia Petrochemical Industry Conference (APIC) in Bangkok emphasized that the industry must adapt to ensure continued prosperity.

APIC 2025 with the theme “Ensuring a Transformed World Prosperity” runs on 15-16 May.

“We are now standing at a defining crossroads,” Federation of Thai Industries, Petrochemical Industry Club (FTIPC) chairman Apichai Chareonsuk said, acknowledging formidable pressures on the industry.

He cited “economic volatility, supply chain uncertainties, and rising expectations for environmental responsibility” among the list of complex challenges facing the petrochemical industry.

However, he viewed these challenges as opportunities for progress.

“These challenges are also opening doors to transformation- through digital innovation, resource efficiency, and sustainable development,” Chareonsuk said.

INDIA AS BEACON OF GROWTH
India, a giant emerging market in Asia, nonetheless, is a “beacon of growth” fueled by burgeoning end-use sectors, according to the country’s Chemicals and Petrochemical Manufacturers’ Association (CPMA) secretary general Shekhar Balakrishnan.

The south Asian country is emerging as one of the fastest-growing economies in the world, he noted.

This growth, he explained, is underpinned by a robust rise in end-use sectors, including automobiles, infrastructure, construction, among others.

These sectors, he added, have propelled the petrochemical industry to new heights, adding that “the Indian petrochemical industry has entered a new phase of growth”.

“As I speak, a new world-scale cracker is in its last stage of commissioning,” Balakrishnan said.

Hindustan Petroleum Corp Ltd (HPCL) is slated to begin commercial operations at its refinery and petrochemical complex at Barmer in India’s western Rajasthan state this year.

The complex can produce 820,000 tonnes/year of ethylene and 400,000 tonnes/year of propylene.

Furthermore, he noted that across the country, “new investments covering a broad spectrum of petrochemicals are materializing to augment India’s production capabilities further and make the petrochemical industry in this part of the world even more robust”.

Balakrishnan also drew attention to the widespread commitment to environmental responsibility in the region.

“I will be failing in my duty if I do not highlight the tremendous efforts that organizations in India and the Asian region are making towards sustainability,” he remarked.

He stressed the balance between the industry’s essential role and the need for responsible practices.

“Petrochemicals are essential enablers of modern life … However, the collective challenge before us is to adopt smart, sustainable processes and technologies,” the CPMA secretary-general said.

“The industry is actively embracing the circular economy, especially in polymers, creating huge opportunities for reuse and recycling while addressing the global crisis of material waste,” he added.

Balakrishnan highlighted the success of the Extended Producer Responsibility (EPR) framework in India.

“This is already yielding significant societal benefits and setting the stage for sustainable industrial growth.”

“For instance, India today recycles over 90% of polyethylene terephthalate (PET) bottles into value-added articles.”

PROTECTIONIST POLICIES PROLIFERATE
Japan Petrochemical Industry Association (JPCA) chairman Koshiro Kudo said that “protectionist trade policies around the world” are casting a shadow over global economic activity.

He also pointed to the disruptive influence on the industry of “growing geopolitical risks, fluctuations in tariff policies, economic security issues, problems in China’s real estate market, and the increasing frequency of natural disasters caused by climate change”.

In Japan, the operating rate of ethylene plants “has remained below 90% since May 2022, and has recently dropped to around 80%, continuing in a very challenging situation.”

Kudo also emphasized the industry’s environmental obligations, stating that it “is also expected to play a role in maintaining the balance of the ecosystem by recycling CO2 [carbon dioxide], as well as supplying materials”.

Achieving sustainability necessitates that “international cooperation and technological innovation in the petrochemical industry are essential, and it is necessary to fully leverage the power of chemistry”, he said.

JPCA’s two-phase approach to structural reform is to focus first on applying available technologies to reduce greenhouse gas emissions and developing innovative technologies for further emission reductions, and then on applying new technologies to achieve sustainable development goals, Kudo said.

He emphasized the need to transform petrochemical complexes into “environmentally friendly ‘sustainable complexes’ through technological innovation” to function as environmental and energy infrastructure hubs.

Kudo also drew attention to the demographic challenge of declining birth rates across Asia.

He stressed the need to utilize technologies such as digital transformation, “green” transformation, and artificial intelligence to improve plant operation efficiency, facilitate technology transfer, accelerate R&D, and improve safety.

Korea Chemical Industry Association (KCIA) chairman Hak-Cheol Shin described the current market as an “unprecedented crisis marked by global oversupply, sluggish demand, and full-scale trade conflicts” which calls for regional unity.

“Amidst growing uncertainties in the global trading order, closer solidarity and cooperation among us are more crucial than ever to ensure the sustainable growth of our industry.”

“The external environment surrounding the petrochemical industry this year is more complex and challenging than ever before,” he said.

Shin warned that “the implementation of US tariff policies is expected to bring about cataclysmic changes in global trade”.

Exacerbating business challenges were “persistent oversupply centered around China” and “instability in raw material procurement stemming from the reorganization of global supply chains”, he said.

If downstream industries weaken due to tariff shocks, the petrochemical industry’s growth momentum may also diminish, the KCIA chief said.

Shin urged a proactive response to both market dynamics and increasing environmental demands.

REGIONAL UNITY IS KEY
“At this critical juncture, APIC members must demonstrate stronger solidarity and leadership than ever before,” KPIA’s Shin said.

“While addressing internal and external risks such as trade conflicts and global oversupply, we must also remain fully responsive to the growing societal demands for enhanced environmental regulations, including carbon neutrality and key elements of the UN Plastics Treaty.”

Shin stressed the need to “enhance operational efficiency, optimize energy utilization, and shift toward high-value-added products through the adoption of cutting-edge technologies” to minimize environmental impacts and reinforce competitiveness.

“As we navigate global challenges – from climate change to economic volatility – our industry stands at the forefront of delivering solutions that balance growth, sustainability, and societal progress,” Malaysian Petrochemicals Association (MPA) president Bahrin Asmawi  said.

Various initiatives are underway in line with Malaysia’s National Energy Transition Roadmap (NETR) and New Industrial Master Plan 2030 (NIMP 2030).

These include investments in carbon capture, utilization, and storage (CCU), green hydrogen, and utilizing bio-based feedstocks, as well as accelerating adoption of renewable energy in production and chemical recycling.

Asmawi stressed the indispensable nature of collaboration, saying: “No single entity can drive transformation alone.”

MPA is committed to fostering partnerships with the government, investors, technology providers, and communities, he said.

Asmawi also proposed a united front among APIC members to address trade policy challenges, particularly suggesting that regional cooperation could lead to “better effective negotiating deals” in the context of recent US tariff announcements.

Petrochemical Industry Association of Taiwan (PIAT) chairman Mihn Tsao emphasized in his key address at APIC 2025 “both the urgency and the opportunity of our time.”

The industry is “called upon to deliver not only economic value but also social and environmental responsibility,” he said.

“Innovation, sustainability, and partnership are no longer optional – they are essential to our continued development.”

Despite facing significant global headwinds in 2024, including geopolitical tensions, supply chain disruptions, inflation, and climate change, Tsao noted the Taiwanese industry’s resilience and “steadfast commitment to transformation”.

This transformation, he explained, included intensified investments in green innovation, AI-driven process optimization, and sustainable material development.

Taiwan has a formal commitment to net-zero emissions by 2050 through its “Climate Change Response Act” and the introduction of carbon fee regulations in 2024 as a “critical turning point”, he said.

Future focus areas must include developing high-value, low-carbon production, driving technological innovation through AI, and deepening international cooperation to secure competitiveness.

“Collaboration across borders and industries is essential in addressing the global challenges we face: decarbonization, overcapacity, shifting geopolitical dynamics, and the fragmentation of the multilateral trading system.”

For Singapore, efforts to transform its industry in line with national sustainability goals, include the Singapore Green Plan 2030 and the national net-zero ambition by 2050, Singapore Chemical Industry Council (SCIC) chairman Henri Nejade said.

This transformation includes the development of Jurong Island into a Sustainable Energy & Chemicals Park focusing on sustainable products, sustainable production, and Carbon Capture and Utilization (CCU).

Government initiatives like the establishment of a Future Energy Fund also support low-carbon and next-generation energy solutions.

Nejade also emphasized the importance of regional cooperation in navigating regulatory landscapes through initiatives like the ASEAN Regulatory Co-operation Platform (ARCP).

The ARCP is an industry-led initiative to drive greater engagements and capacity building involving all the regulators and industry representatives from all the 10 ASEAN member states.

Such cooperation helps “address non-tariff barriers, thus helping to create conducive business environments.”

Insight article by Nurluqman Suratman

Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy.

Thumbnail image: Leaders of the Asia Petrochemical Industry Conference (APIC) member countries. The event runs on 15-16 May in Bangkok, Thailand. (Nurluqman Suratman)