Global polyolefins market - The big picture: Growth despite headwinds

Despite economic headwinds, trade tensions, and sustainability pressures, the market is showing remarkable resilience and adaptation.

The Big Picture: Growth Despite Headwinds

The global polyolefins market has defied pessimistic forecasts, growing at a modest but respectable pace. While 2024 saw just 1.7 percent growth, 2025 is on track for a more robust 4 percent expansion. This recovery comes despite ongoing concerns about Trump administration tariffs and Middle East instability that many analysts predicted would hamper growth.

What's driving this resilience? For one, manufacturing sectors have shown unexpected strength in early 2025. While some activity was accelerated to beat new sanctions, production has remained at higher levels than expected. Additionally, lower crude oil prices are creating a mixed bag of effects – challenging for energy exporters but beneficial for developing economies through reduced energy costs.

China remains the industry's most compelling narrative. After struggling with a severe property and construction crisis that limited polyolefin growth to just over 1 percent in 2024, China has roared back in 2025 with consumption growth projected around 6 percent. This revival is powering much of the global industry's momentum.

Interestingly, this growth has been largely absorbed by new local supply, providing limited relief to struggling exporters in neighbouring countries such as Singapore and South Korea. This self-sufficiency trend highlights China's strategic focus on developing domestic production capacity, which now accounts for 33 percent of global capacity despite representing 40 percent of global demand.

Regional Spotlights: A World of Contrasts

North America: Cautious Navigation

The North American market is carefully navigating complex economic currents. With polyolefin demand tipping 26 million tons in 2024 and growing at less than 1%; the region faces the dual challenges of unwinding Biden-era infrastructure investments and inflationary effects from tariffs.

Despite these headwinds, there are bright spots. The automotive sector, including electric vehicles, continues to drive polypropylene demand. Meanwhile, major producers like ExxonMobil plan to add up to 3 million tons of new polyethylene capacity by 2031.

Europe: The Struggle for Competitiveness

Europe's polyolefins sector continues to face existential challenges. With gas prices three times higher than US levels in early 2025, European producers operate at a severe competitive disadvantage. Operating rates hover around 75 percent, below long-term averages, reflecting weak regional demand.

In response, the EU finally began addressing the industry's competitiveness in July 2025, presenting an Action Plan for the Chemicals Industry that focuses on resilience, affordable energy, and innovation. Whether these measures will be enough to stem the tide of closures remains to be seen.

Middle East: Export Powerhouse Under Pressure

The Middle East continues its role as the world's polyolefins export powerhouse, accounting for just 6 percent of global demand but 12 percent of capacity. However, growth has slowed to just 1-2% in 2025 as the region grapples with economic challenges in Turkey and security concerns involving Israel, Iran, and Yemen.

The region's extreme margin pressure has driven several producers into heavy losses in recent years. While operations based on ethane cracking remain profitable, those running PDH units and steam cracking heavier feeds have struggled to maintain profitability.

Africa: Emerging Potential

Despite political instability and currency challenges, Africa's polyolefins market continues to show promising growth. The continent's young, expanding population with increasing disposable income is driving demand for everything from household goods to agricultural films.

A significant development is the Dangote Group's massive 880,000 tons per year polypropylene facility in Nigeria, which began production in early 2025. This project represents the kind of investment that could gradually transform Africa from a major importer to a more self-sufficient player in the global market.

The Sustainability Challenge

The industry's relationship with sustainability remains complicated in 2025. Despite growing regulatory pressure, polyolefin recycling faced a severe downturn in 2024 as falling virgin resin prices made recycling economically unviable, leading to facility closures across Europe and North America.

The EU's new Packaging and Packaging Waste Regulation, introduced in February 2025, sets ambitious targets, including that packaging must be at least 70% recyclable by weight. However, the technology gap remains significant – commercial pyrolysis projects have consistently underdelivered, pushing realistic commercialization back by several years.

Looking Ahead

Perhaps the most significant challenge looming over the industry is the massive capacity expansion on the horizon. Annual firm polyolefin capacity is set to increase by around 45 million tons by 2028, with about 80 percent of this increase in China alone.

This impending supply surge has already triggered restructuring efforts in countries with excess and uncompetitive capacity. Some plants have closed, and there are plans for large-scale capacity reductions in exporting countries like South Korea. Without significant demand growth or more substantial capacity rationalization, the industry could face severe margin pressure in the coming years.

As we navigate through 2025, the global polyolefins industry demonstrates both remarkable resilience and concerning vulnerabilities. Regional disparities in growth, competitiveness, and sustainability progress create a complex landscape for producers and consumers alike.

For industry stakeholders, success will depend on strategic positioning – whether through cost leadership, specialty product development, sustainability innovation, or geographic diversification. For policymakers, the challenge remains balancing environmental goals with economic realities in an increasingly competitive global market.

One thing is certain: the polyolefins industry of 2030 will look markedly different from today's landscape, shaped by these intersecting forces of capacity expansion, sustainability pressures, and shifting global trade patterns.

Find out more…

Market Analytics: Polyolefins - 2025

This report provides analysis and forecasts to 2050 of supply and demand of the global polyolefins markets, including low density polyethylene (LDPE), linear low density polyethylene (LLDPE), high density polyethylene (HDPE) and polypropylene. This analysis identifies the issues shaping the industry as well as provide detailed demand breakdown by end-use and supply, demand and net trade data for 42 countries.

About Us - FGE NexantECA is the leading advisor to the energy, refining, and chemical industries. Our clientele ranges from major oil and chemical companies, governments, investors, and financial institutions to regulators, development agencies, and law firms.  Using a combination of business and technical expertise, with deep and broad understanding of markets, technologies, and economics, FGE NexantECA provides solutions that our clients have relied upon for over 50 years.