The price trends in the chemical market in 2024 will mainly be guided by the raw material (crude oil) sector and macroeconomic conditions, with supply-demand fundamentals playing a relatively weaker role. From a price perspective, most chemical products in 2024, except for the rubber industry, will lack highlights, though the overall price center in the first half of the year will be higher, with nearly half of the products showing a price increase compared to 2023. In terms of profits, around 60% of products will experience a decrease in profits compared to 2023, leading to more difficult operating conditions for companies. In terms of imports and exports, the continued commissioning of large refining and chemical projects, such as the South Port and Yulong facilities, and increased domestic alternative products will reduce imports as a major trend. Additionally, with the improvement of the external environment, the export volume of chemical products will increase compared to last year.
Among the 78 products monitored by JLC for profit, 45 products (57.69%) will be profitable in 2024, while 33 products (42.31%) will face theoretical losses. In 2023, 41 products (53.85%) were profitable, while 36 (46.15%) had theoretical losses, and 1 product had zero profit. Although the number of profitable products will be slightly higher in 2024 than in 2023, profits for 60% of products will shrink year-on-year. The top profit-ranking products remain Ethylene Propylene Diene Monomer (EPDM), MDI, and POM, but MDI and POM will see a decrease in profits, while EVA and TDI will experience a significant profit shrinkage and fall out of the top ten. On a positive note, products like Butadiene and Ethylene Glycol Monobutyl Ether will see significant profit increases compared to last year, while coal-based PP and PE will experience small profit increases. On the downside, the strong raw material benzene price will lead to increased losses in downstream products like Styrene, Adipic Acid, Caprolactam, Phthalic Anhydride, Phenol, Acetone, and others. Ethylene Glycol, with increased refining capacity, will face relatively sufficient supply, continuing its loss situation.
Among the top ten profitable products, two belong to the rubber industry (Ethylene Propylene Rubber and Butadiene). In 2024, Ethylene Propylene Rubber's higher profits are mainly due to domestic production units undergoing both planned and unplanned shutdowns, leading to a reduction in the availability of certain grades in the market. This situation has supported price increases, making the production profitability of Chinese EPDM significantly higher than in the previous year, with an average profit of 5,910 CNY/ton, a 16.89% increase from 2023. In 2024, Butadiene production companies will see a significant profit improvement compared to 2023 due to a tight supply in the market for most of the year, driving prices higher. However, downstream products' prices will not increase as much as the raw material Butadiene, leading to negative profit margins in the downstream. Butadiene profits peaked in September but decreased significantly in the fourth quarter due to new production capacity and relatively sufficient market supply.
The Polyurethane industry has two profitable products (MDI and Aniline). In 2024, domestic pure MDI and polymer MDI markets will show divergent trends. The average price of pure MDI will drop, while polymer MDI prices will increase. Early in the year, the adjustment of MDI production ratios between pure and polymer MDI led to a limited increase in polymer MDI production, but with strong exports and growing domestic demand, market prices rose. However, pure MDI faces oversupply and price weakness. With raw material benzene prices high, the overall MDI profit will slightly decrease. However, MDI's high production barriers allow for higher revenue and profit compared to other chemical products, keeping its profit ranking high. The domestic aniline market will also perform well due to steady growth in downstream demand, including MDI and rubber additives, alongside increased exports. Nevertheless, profit will decrease due to increased production and high raw material prices.
The Methanol and downstream industries have one profitable product (POM). In 2024, POM will maintain high profitability with stable prices and mild raw material price increases, providing some support. Technological innovations in POM production have helped reduce costs, allowing for further profit growth. As a result, POM will remain profitable in 2024.
The Ethylene Oxide industry has one profitable product (Ethylene Glycol Monobutyl Ether). In 2024, the profit margin for this product will fluctuate significantly, peaking in March, followed by a decline as the market price drops. However, the price trends of raw material n-Butanol closely mirror that of Ethylene Glycol Monobutyl Ether, meaning the profit margin for the product will remain substantial compared to 2023.
The Plasticizer industry has two profitable products (Octanol and n-Butanol). In 2024, the profitability of n-Butanol and Octanol producers will remain high, though slightly lower than in 2023. The cost pressures on Octanol are modest, while demand for n-Butanol, including downstream products like butyl acrylate and butyl acetate, has significantly increased, and supply remains tight for most of the year, keeping profits high.
The Plastic industry has two profitable products (PE and PP). Coal-based PE manufacturers will benefit from lower coal prices in 2024, improving profitability. Despite high domestic coal production, weak demand has led to a decline in consumption, but lower coal prices have reduced raw material costs, enhancing profit margins for coal-based PE producers. Coal-based PP profits will increase slightly, though they will decrease later in the year due to weak demand and higher coal prices.
Among the top ten loss-making products, the Epoxy Resin industry accounts for one (Epoxy Resin). In 2024, the lack of demand in downstream sectors, combined with imbalanced supply and demand, will continue to put pressure on the industry, leading to continued losses. Some companies will adjust their operating loads to balance supply and demand, but the oversupply of domestic products and weak export performance will contribute to the worsening of losses.
The Benzene and downstream industry accounts for five products (Bisphenol A, Adipic Acid, Caprolactam, Phenol, and Acetone). In 2024, Bisphenol A will be in continuous loss due to oversupply, weak demand, and high costs, with losses peaking in late September. Adipic Acid will see a loss transition in 2024 due to increased domestic supply and insufficient downstream demand. Caprolactam producers will face losses throughout most of the year, while Phenol and Acetone producers will suffer from high raw material prices, making profitability difficult.
The Plastic industry accounts for two products (BOPET and CPP). In 2024, the BOPET industry will remain in negative profitability due to excessive supply and limited demand, while the CPP industry will also continue to experience losses due to supply-demand imbalances. However, losses will be less severe compared to 2023.
The Coal Chemical industry accounts for one product (Phthalic Anhydride). In 2024, producers of phthalic anhydride will see increased losses due to oversupply and weak demand from downstream sectors like the real estate industry. Although raw material prices for n-Butane remain stable, the narrowing price gap will lead to further losses for producers.
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