A recent report from the independent research organization Rhodium Group has highlighted significant challenges facing foreign chemical manufacturers due to China’s expanding chemical production industry. Released on November 2, this report outlines how foreign producers are being squeezed from two directions: firstly, by the increasing preference for domestic products among Chinese consumers, which has resulted in a drop in foreign sales within China; and secondly, by the intensifying competition posed by Chinese exports in other global markets. As a result, American chemical companies are struggling to cope with an oversupply in the market coupled with declining prices.
Over the past 25 years, China’s chemical production has skyrocketed by 18 times, now accounting for over 45% of the global capacity for basic chemicals and plastic resins. This production level significantly exceeds domestic demand, particularly in light of a downturn in the real estate market since 2021. The resulting drop in demand for construction-related chemicals has led to declining prices and inventory backlogs, with profits in the industry shrinking substantially. Currently, nearly one-third of China’s chemical manufacturers are operating at a loss.
Chinese imports of chemicals have also seen a notable decline, causing a more significant impact on foreign producers than the corresponding rise in Chinese exports has. This shift has placed additional pressure on American chemical enterprises, leading to the shutdown of several manufacturing plants. For instance, Westlake Corporation, based in Houston, announced in December 2025 that it would close four chemical production facilities located in Louisiana and Mississippi, affecting approximately 300 employees. These facilities produced essential materials used in the manufacturing of plastics and other industrial products, including polyvinyl chloride (PVC), commonly used in pipes and construction materials.
In a filing with the U.S. Securities and Exchange Commission (SEC), Westlake cited global oversupply and significantly reduced prices due to low-cost exports from Asia as factors leading to the closure of these plants. The company’s three North American facilities were deemed no longer competitively viable due to increasing manufacturing and transportation costs, prompting the decision to exit its styrene business.
Westlake has estimated that costs related to these plant closures could amount to around $415 million, although it anticipates these adjustments will improve its annual operating profit.
Despite acknowledgment of declining market demand and fierce competition, Chinese authorities remain committed to promoting growth within the chemical sector. In September 2025, a joint initiative by the Ministry of Industry and Information Technology and six other governmental departments led to the release of a “Stabilization Growth Plan for the Petrochemical and Chemical Industry.” The objective is to achieve an average annual growth rate exceeding 5% in the value-added production of the petrochemical and chemical industries between 2025 and 2026.
This plan mandates not only the upgrade of existing facilities and the development of advanced chemical products but also seeks to restrain some new production capacities. While Rhodium Group argues that these measures may enhance the efficiency of Chinese manufacturers, they are unlikely to significantly reduce the existing oversupply in the market.
The report anticipates increasingly fierce competition among Chinese manufacturers in the specialty chemicals sector, historically a domain where foreign companies have enjoyed higher profit margins.
In response to these challenges, American chemical producers are looking for protective measures under U.S. trade laws. An investigation initiated by the U.S. Department of Commerce on October 20 examines whether certain amines imported from China are being sold at unfairly low prices or receive government subsidies. These amines are widely used across various industrial processes and products.
The investigation follows a complaint filed by Evonik Corporation, based in New Jersey, and Huntsman International, based in Texas. The Department of Commerce’s report indicates that the alleged dumping margins range from 244.94% to 352.32%. It is important to emphasize that these figures represent the allegations currently under investigation and do not yet constitute finalized determinations of wrongdoing.
On November 12, the U.S. International Trade Commission is scheduled to vote on whether there is reasonable evidence that these imports are harming or threatening U.S. manufacturers. Should the vote affirm this finding, the investigation will proceed.
However, Rhodium Group warns that imposing tariffs solely on select Chinese chemical products will not fully alleviate the pressures faced by foreign manufacturers. Chinese chemical products can still enter overseas markets as raw materials for downstream finished goods, while foreign producers continue to see sales declines within the Chinese domestic market.