U.S tariffs are disrupting the global petrochemicals market

U.S. tariffs are adding strain to an already soft petrochemicals market, and China, the biggest producer, is redirecting more cargoes to Asian buyers, industry officials said in Singapore on Tuesday.

“If tariffs remain in place, petrochemicals trading will see another 15% drop on top of the 34% drop it has seen in the last five years,” said Ganesh Gopalakrishnan, TotalEnergies’ head of petrochemical trading.

Gopalakrishnan said traders without their own plants are struggling. He said the 34% drop in volumes over five years is due to too much supply. Haldia Petrochemicals’ Sanjiv Vasudeva said tariffs are pushing countries to be more protectionist.

According to Reuters he added that planning near-term investments has become tougher because of excess capacity and price swings, while India’s consumption remains healthy with a steady growth rate, one of the few bright spots for the industry.

China is flooding Asia with petrochemicals

Chinese products are moving into “our traditional markets,” said Bahrin Asmawi, chief commercial officer at Petronas Chemicals Group.

He said the company is expanding into specialty chemicals as exports ranging from resins to finished goods have been displaced by China’s heavier push inside Asia after U.S. tariffs.

“Our main market is South Asia, Thailand, Indonesia, Malaysia, Vietnam,” Asmawi said. “And all these are being supplied, being attacked by China because they cannot supply into the U.S.”

TotalEnergies has said previously that the oil market is sliding toward oversupply as Opec+ raises output while demand weakens in key economies. The company warned that more crude is coming to market just as consumption slows, setting up a softer backdrop for prices.

A related trade shift is playing out in Asia. As reported by Cryptopolitan, China has stepped up shipments to Southeast Asia after a steep fall in direct exports to the United States.

That redirection has swelled regional flows. Shipments to Indonesia, Malaysia, Thailand, and Vietnam reached their highest monthly levels on record, the report said.