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John Richardson, Director of Market Insights at ICIS, joins host Victoria Meyer to unpack the turbulence of 2026 in the global chemical markets. John shares perspectives on how the Middle East conflict rapidly shifted the market from chronic oversupply to acute undersupply, sending shockwaves through supply chains. The conversation highlights China’s evolving strategy, moving from a net importer to a net exporter of key petrochemicals, alongside the roles of stockpiling, export push, and moving down the cost curve.
Victoria and John discuss the growing divide between Asian producers, with Chinese assets better positioned than those in Northeast Asia, which have struggled with costly feedstocks and plant shutdowns. John explains how anti-dumping measures and the proliferation of safeguard policies are influencing global trade, and why project delays and overinvestment may push out recovery timelines. Looking ahead, John outlines the key market and geopolitical signals to watch for as the industry navigates through uncertainty.
Key topics covered:
- Effects of the Middle East crisis on chemical supply chains and market pricing
- China’s rapid shift from importer to exporter and its impact on global markets
- The influence of cost, integration, and energy targets on China’s chemical industry
- Why some plants may not restart and the long-term view on capacity and demand
- The future of project investment and what signals indicate market recovery
Killer Quote: “Chaos. If you were sitting in the markets on 28th of February, your main concern was over supply…then suddenly it was an under supply crisis when the strait closed…” – John Richardson
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Watch This Episode with John and Victoria Here:
China’s Opportunistic Moves and Changing Dynamics in Asia’s Chemical Industry with John Richardson
In today’s fast-moving chemical industry, volatility is shaping business decisions. The first half of 2026 brought unexpected developments, ranging from geopolitical turmoil to profound supply chain swings. In this episode, Victoria sat down with John Richardson, Director of Market Insights at ICIS, for a candid discussion about what has happened so far this year, how China is leveraging its position, and what global producers need to watch moving into the second half of the year.
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From Oversupply to Sudden Shortages
Early in the year, the industry was contending with lingering concerns over chronic oversupply, a scenario that has stretched on since late 2021. Many expected the down cycle to persist until at least 2030. Then, the war in Iran and resulting closure of shipping lanes flipped the market script almost overnight. Suddenly, oversupply was replaced by a supply crisis, especially in Asia, where 60% or more of naphtha and LPGs come from the Middle East.
Wave after wave of force majeure declarations rolled through the region as plants scrambled for feedstock, leading to widespread shutdowns. Meanwhile, buyers raced to secure product at soaring prices. The ICIS petrochemical index registered the sharpest price increase in more than two decades through March and April. As shipping lanes slowly reopened, prices collapsed just as quickly, leaving players to manage high-cost inventories and ongoing uncertainty about how long low prices would last.
China’s Strategic Response
China’s chemical sector saw opportunity amid chaos. While North American polyethylene producers benefited, China took assertive moves, flipping from a net importer of olefins to an exporter, a significant shift considering persistent deficits in some products like polyethylene.
Anecdotes abound of material, such as polyethylene, stored since 2021 now entering export channels. Many believe this stockpiling ties back to government production quotas and a drive for independence from imports. Over the past decade, China has focused on building integrated, efficient complexes, optimizing costs, and pursuing energy strategies like coal-to-chemicals, which, despite high capital expenditure, have supported robust margins on a variable cost basis. These advancements are making China’s plants highly competitive, especially as the country pushes less-efficient cracker facilities toward restructuring or closure to meet energy and carbon goals.
Challenges for Northeast and Southeast Asian Producers
While China has managed to strengthen its position, many Northeast and Southeast Asian producers have been forced to idle plants. Their older assets and reliance on imported feedstocks put them at a disadvantage, particularly in a world where geopolitics can disrupt supply at any moment.
With limited naphtha storage and the sudden price leaps, many operators had no choice but to halt operations, some possibly for good as unfavorable economics take hold. The long-term viability of the traditional long-distance cracker model is now under scrutiny. As China cements a foothold in new export markets, reaching into Africa, Turkey, India, and South America, competitive dynamics across the region are fundamentally changing.
Policy, Protectionism, and Delayed Recovery
In response, countries are weighing anti-dumping and safeguard measures, especially in polypropylene, but concrete outcomes remain limited for now. Despite some hope that forced shutdowns and investment delays could rebalance the market, a significant overhang of capacity remains, with recovery now forecasted as far out as beyond 2030.
Meanwhile, strategic imperatives, like those behind Nigeria’s investments in refining and fertilizer (despite global supply/demand imbalances), show that national priorities can override traditional market logic. Sovereign security of supply and job creation are becoming decisive factors shaping future investments.
Looking Ahead: What Signals Should We Watch?
As producers and analysts alike look to the second half of the year, much hinges on geopolitical developments, especially around the Strait of Hormuz. Even if a peace agreement sticks, restoring normal shipping flows and insurance rates will take months. Most expect crude and chemicals markets may not fully stabilize until early next year. Once the immediate crunch eases, the inevitable challenge of oversupply, and the competitive battle for global exports, will only intensify.
For chemical producers, agility in responding to supply shocks, geopolitical risk, and competitive shifts is now a baseline requirement. As China moves further to the left of the cost curve and other regions reconsider legacy investment models, the race is on to create sustainable, resilient supply chains. As John summed up, chaos has defined the first half of the year. For the months ahead, business leaders are hoping for less turbulence and a return to some predictability in the markets.
About John Richardson:
John Richardson – Director of Market Insights, ICIS
John Richardson is a Senior Consultant at ICIS. John focuses on the polyolefins markets (polypropylene, polyethylene) in China, Asia and Europe. John has been very privileged to work with many of the smartest people in the petrochemicals industry over the last 22 years, helping steer their strategies in the right direction. Without fear or favor of internal company politics and conventional thinking, John provides the objective analysis you need to manage your business in today’s incredibly uncertain world.
ICIS is the global source of Independent Commodity Intelligence Services. ICIS connects data, markets and customers to create a comprehensive, trusted view of the global commodities markets, enabling smarter business decisions that optimize the world’s resources.