U.S. Tariffs Threaten Global Petrochemicals Trade with 15% Decline

The global petrochemicals industry faces mounting pressure as U.S. tariffs threaten to further reduce international trade flows. Speaking at the APPEC conference in Singapore, Ganesh Gopalakrishnan, head of petrochemical trading at TotalEnergies, warned that continued tariffs could slash global petrochemicals trade by another 15%. This would add to the 34% decline already recorded over the past five years, largely due to oversupply and shrinking margins.

Trading firms without production assets are among the hardest hit, as excess capacity in the sector erodes profitability and squeezes smaller players out of the market. The tariffs are also driving protectionist policies, reshaping global trade dynamics. Sanjiv Vasudeva, executive vice president and chief market officer at Haldia Petrochemicals, noted that overcapacity and market volatility make short-term investment planning increasingly difficult.

The shift in trade flows has opened the door for Chinese petrochemical products to move into traditional markets once dominated by other producers. Bahrin Asmawi, chief commercial officer at Petronas Chemicals Group, highlighted how these changes are displacing established players.

Despite the challenges, industry leaders identified one area of resilience: India. According to Vasudeva, Indian consumption remains strong, with stable demand growth supporting regional balance.

The combination of tariffs, protectionism, and overcapacity paints a challenging outlook for the petrochemicals sector. Unless trade barriers ease, the industry could face deeper contraction, forcing trading houses and producers alike to adapt to shifting supply chains.

With geopolitical tensions adding uncertainty, global petrochemical players are bracing for a period of tighter margins and intensified competition, while looking to emerging markets like India to provide much-needed stability.