1、ab24 July 2025Global ResearchN.A.Chems&PkggChina Policy Impacts on Commodity ChemsGetting more visibility into China policy which could start to address industry oversupplyWeve been watching the headlines closely to learn more about how China supply policy could impact commodity chemicals.Earlier th

2、is week UBS China Economists highlighted some coming news on how China was planning to address industry over capacity(link),and this specifically called out petrochemicals in addition to other materials(basic materials and adv industries).Today weve seen news indicating that China specifically wants

3、 to review permits to either upgrade or potentially shutdown less efficient sites which are more than 20 years old(Chinese version-link,English reference-link).There have also been comments about phasing out 30 year old capacity.We did a quick analysis to see where this has the most and least impact

4、.Our analysis finds that this could have the most impact on Caustic,PVC,and TiO2.In each case 2005 capacity in China as a%of current global supply is 10%.If this capacity were to shut,this would have a large impact on industry utilization rates,and get global utilization rates into the high 80%range

5、,which could see a return to pricing power.Within our coverage this could benefit WLK(global PVC),OLN(caustic,but more NA focus),and CC/TROX(TiO2).Though were not sure if current plans extend into TiO2.There are impacts across all commodity chemicals,discussed below,but the global impact may not be

6、enough.We see improvement in ethylene/PE(DOW,LYB),propylene/PP(LYB),acetic acid(CE),and methanol(MEOH),but China alone may not be enough.More details below.Impacts of China reducing supply of plants that are 20 years oldOur analysis looks at China capacity in 2005 and compares that to current China