Beijing [China], November 3 (ANI): China’s rapid expansion of its chemical manufacturing industry is putting increasing pressure on foreign producers, squeezing them out of the domestic Chinese market while intensifying competition in international markets, according to a report by the Rhodium Group cited by The Epoch Times (TET).
In a report released on November 2, the Rhodium Group stated that China accounts for more than 45 per cent of global production capacity for basic chemicals and plastic resins, with its chemical output expanding 18-fold over the past 25 years. The report noted that the massive expansion has created production capacity exceeding domestic demand, leading to falling prices, accumulating inventories and shrinking profit margins among Chinese manufacturers.
According to The Epoch Times report, foreign chemical manufacturers are facing pressure on two fronts: losing market share in China as domestic companies replace imported products, and encountering growing competition from Chinese chemical exports in overseas markets. The Rhodium Group found that the decline in China’s chemical imports has so far caused greater damage to foreign producers than the increase in its exports.
The impact of the growing competition is already being reflected in decisions by American chemical manufacturers to shut down production facilities. Houston-based Westlake Corporation announced in December 2025 that it would close four chemical production units in Louisiana and Mississippi, affecting approximately 295 employees.
As cited by TET, the closures involved chemicals used in the production of plastics and other industrial materials, including polyvinyl chloride (PVC), which is commonly used in pipes and construction materials.
In a filing with the US Securities and Exchange Commission (SEC), Westlake attributed the decision to global overcapacity and increased low-priced Asian exports, which had pushed down prices for several of its chemical products. The company stated that three of its North American production units were no longer globally cost-competitive in export markets because of high manufacturing and transportation expenses. It also decided to exit styrene production, citing an unfavourable export outlook.
Westlake estimated that the closures would result in approximately USD 415 million in charges, while expecting the restructuring to improve its annual operating earnings.
The Rhodium Group report, as cited by TET, traced China’s chemical industry expansion to Beijing’s efforts over the past two decades to strengthen domestic manufacturing and reduce reliance on imported industrial materials. However, the downturn in China’s property market, which began in 2021, weakened demand for construction-related chemicals at a time when investments in new production facilities were accelerating.
Despite acknowledging weak demand and intensifying competition, Beijing continues to pursue expansion in the sector. According to the report, a September 2025 industrial plan issued by seven Chinese government agencies targets average annual growth of more than 5 per cent in the value added by the petrochemical and chemical industries during 2025 and 2026.
The plan calls for limiting certain new production capacities, upgrading existing facilities, developing advanced chemical products and expanding into international markets. However, the Rhodium Group warned that these measures could improve the efficiency of Chinese manufacturers without significantly reducing surplus production capacity.
The report also cautioned that Chinese producers are likely to increase competition in specialised chemicals, a segment where foreign manufacturers have traditionally enjoyed higher profit margins.
Meanwhile, American chemical producers are seeking relief through trade protection measures. On October 20, the US Department of Commerce initiated investigations into whether certain chemical compounds imported from China were being sold at unfairly low prices or benefiting from government subsidies.
The investigations followed petitions filed by New Jersey-based Evonik Corporation and Texas-based Huntsman International. The products under investigation are amines, chemical compounds used in various industrial processes and products.
TET reported that the Commerce Department cited alleged dumping margins ranging from 244.94 per cent to 352.32 per cent. However, these figures represent allegations under investigation and do not constitute established violations.
The US International Trade Commission is scheduled to vote on November 12 on whether there is a reasonable indication that the imports are harming or threatening American manufacturers. An affirmative decision would allow the investigations to proceed.
The Rhodium Group warned that tariffs targeting individual Chinese chemical products may not be sufficient to address the broader challenges facing foreign manufacturers. Chinese chemicals can also enter international markets as components of finished goods, while foreign companies continue to lose market share within China. (ANI)
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