Recently, the Ministry of Industry and Information Technology and other departments jointly released the "Work Plan for Stable Growth in the Petrochemical and Chemical Industry (2025–2026)" (hereinafter referred to as the "Work Plan"). The Work Plan addresses the challenges of 'over-competition' from five dimensions: 'optimizing supply, promoting transformation, expanding consumption, strengthening carriers, and broadening cooperation,' emphasizing quality and efficiency as a priority to safeguard stable growth in the petrochemical and chemical industry. This plan has attracted widespread attention and positive responses within the industry.
The plan is in line with national conditions and has practical significance
Tang Anzhong, a senior environmental management expert at Sinopec Jiujiang Branch, told reporters that the Ministry of Industry and Information Technology's 'Work Plan' proposes to 'focus on efficiency,' which not only aligns with the current national conditions but also has practical significance, helping to address the 'involution' dilemma in the petrochemical industry.
Tang Anzhong pointed out that in the past, people often said, 'As long as it is an industry run by Chinese, it will ultimately not be profitable.' If the scale is blindly expanded, it will only sacrifice profits, research and development capacity, and safety and environmental protection, ultimately dragging down product quality and preventing sustainable development.
A metaphor can help better understand the core of 'being efficiency-centered': evaluating whether a person is healthy does not primarily depend on their weight, but on physical fitness, mental and physical health, and intrinsic motivation. This is exactly the fundamental difference between 'simply pursuing scale' and 'focusing on achieving efficiency.'
From the perspective of market background, the chemical market has been continuously sluggish in recent years, closely mirroring the trends in the real estate sector. After reaching its peak around 2020, China's real estate market entered a downward trajectory from 2021 onward, with both prices and sales declining. Since 60% of domestic chemical materials are used in real estate, under this context, it is naturally difficult for the chemical market to improve.
Next, let's look at the differences in industries at home and abroad. Foreign product pricing often takes into account labor costs, R&D investment, and safety and environmental protection costs comprehensively. For example, NVIDIA chips justify their high prices due to their unique advantage of providing the sustained computing power required for artificial intelligence. In contrast, in the domestic chemical industry, most of the new plants built since the 13th Five-Year Plan have been integrated refining and chemical enterprises. From the beginning of the 13th Five-Year Plan to the end of the 14th Five-Year Plan, refining and chemical production capacity nearly doubled. Currently, refining capacity exceeds 920 million tons (compared to about 910 million tons in the U.S., which is on a declining trend, while the EU entered a capacity reduction phase earlier and shifted to high-end polyolefins, synthetic resins, high-end carbon fibers, and other high-value products). Coupled with the development of new energy vehicles leading to insufficient diesel demand, national restrictions on refining capacity have become an inevitable choice, as its scale cannot expand indefinitely.
Conduct an in-depth analysis of the logic behind corporate behavior. Taking the refining industry as an example, companies pursue economies of scale. On one hand, this is to reduce costs, capture market share, and gain marginal benefits; on the other hand, they aim to expand refining capacity to promote the transformation of single-fuel refineries into integrated refining and chemical operations, laying the foundation for subsequent high-end, intelligent, and green development. However, the real dilemma lies in the fact that domestic market share is limited, while foreign market barriers are high. Companies are stuck in a predicament of 'being eliminated if they do not develop' and 'expanding capacity repeatedly without producing high-end, high value-added products,' making it ultimately difficult to survive in intense competition.
Return to the essence of business management. The core goal of running a business is to achieve sustainable development, and profitability is the foundation of sustainability. If a company relies on loans for operations in the long term, it will be difficult to survive.
Li Qianhua, Chairman of Chongqing Tuoqi New Materials Co., Ltd., stated that the introduction of the "Work Plan" is timely, as the industry currently indeed needs to improve quality and efficiency. Previously, the vast majority of petrochemical companies were keen on promoting development through scale, relying on capital investment to expand, but lacked core technologies, resulting in severe homogeneous competition. However, with the rapid growth of the domestic economy, the market has nearly become saturated and even oversupplied, making the scale-driven development model unsustainable. Therefore, at the current historical stage, Chinese enterprises should aim for industrial upgrading, continuously narrow the gap with advanced levels in Europe, America, and other countries, and address development shortcomings. Internally, enterprises also need to strengthen refined management, safety, and environmental protection, carefully plan overall strategies, and continuously improve quality and efficiency.
It is undeniable that in recent years, although Chinese petrochemical enterprises have made significant progress, their development levels vary greatly. Some companies have successfully become leaders both domestically and internationally, while others struggle in the midst of 'involution.' Of course, 'involution' and excess are also inevitable stages in industry development. Without excess, there would be no competition, elimination, or upgrading. When industry 'involution' reaches a certain level, lagging enterprises will inevitably be eliminated, and the market will return to balance, although at present this balance occurs more slowly and with greater difficulty. Only by 'focusing on efficiency' can market rebalancing be achieved, allowing the industry to reveal a new outlook. In this process, enterprises that can withstand challenges and continuously improve will survive and thrive even better.
The plan brings three profound insights to enterprises.
Yin Yinhua, General Manager of Hubei Saning Chemical Co., Ltd., emphasized in an interview with reporters that currently, with rapid capacity growth coupled with a slowdown in demand, competition among petrochemical companies is becoming increasingly intense, and the industry's profitability continues to decline. Therefore, recently, the Ministry of Industry and Information Technology and other departments jointly issued the "Work Plan," emphasizing the need to achieve stable growth. Unlike previous measures, the core of this round of stable growth is prioritizing quality and efficiency, which undoubtedly points the way forward for the petrochemical industry. It aims to awaken the industry from rapid expansion in scale and lukewarm market reactions, guiding enterprises to focus calmly and diligently on improving quality and efficiency.
A thorough study of this 'Work Plan' reveals three insights it offers to enterprises.
Lesson one: It is essential to fully invest in the development of new products. The market downturn is primarily due to a decline in purchasing power, with existing products already saturated and consumers having grown weary of them. Therefore, business managers must resolutely develop products that meet new demands and trends, and find new solutions to satisfy higher-level customer needs. At this stage, innovation is not a choice, but a necessity for survival.
Revelation Two: Drastically reduce costs. During periods of severe 'involution', competition is intensely fierce, and both the number of orders and unit prices continue to decline. Many companies often launch price wars to capture market share. The essence of responding to a price war is to restructure costs. Therefore, companies need to strive to cut costs. Cost control is not a financial issue, but a business philosophy.
Insight Three: Implement comprehensive marketing. Comprehensive marketing does not mean that everyone engages in sales work, but that everyone understands the customers, serves the customers, and pays attention to how to create value for them. In times of intense competition, it is even more important to clearly know who the customers are, how to serve them, and why they choose us over our competitors. Clarifying these issues is more effective than blindly selling. Marketing is not about pushing products, but about creating value.
Focusing on efficiency, the company has precedents.
The "Work Plan" proposes adhering to the general principle of seeking progress while maintaining stability, focusing on quality and efficiency. From 2025 to 2026, the added value of the petrochemical and chemical industries is expected to grow by more than 5% annually, with economic benefits stabilizing and recovering.
Tang Anzhong stated that to achieve the goals of "sustainable development" and "benefit-centered" operations, enterprises must learn to "make choices." They need to accurately align with market demand and fully anticipate future trends. As the "Work Plan" requires for the petrochemical industry, the sector must shift from focusing mainly on meeting the basic needs of people's daily lives to concentrating efforts on areas such as new energy vehicles, electronic chemicals, and new chemical materials.
Focusing on the core of quality and efficiency, the Jiujiang Petrochemical system promotes cost control and efficiency improvement. On one hand, it optimizes the crude oil structure to obtain high-quality raw materials at the best cost-performance ratio; on the other hand, it solidly implements cost reduction in the production process, comprehensively optimizes processing schemes, and strictly controls costs of fuel, chemical auxiliaries, and maintenance. At the same time, by concentrating on the development of high value-added products, while ensuring low-cost production of gasoline and the production of power battery coke, it strengthens product quality monitoring and strives to enhance product efficiency.
To continuously improve quality and efficiency and break development bottlenecks, Jiujiang Petrochemical is committed to advancing its transformation and development. The company focuses on strategic directions such as new chemical materials and green low-carbon technologies, accelerating the extension and strengthening of the aromatics industry chain, and striving to build a world-leading green and intelligent refining and chemical enterprise through high-end, intelligent, and green development paths.
Implementing the "Work Plan": Enterprises in Action
Zhang Hanqing, General Manager of Jiangsu Huachang Chemical Co., Ltd., stated that the 'Work Plan' serves as a guiding 'beacon' for promoting high-quality development under the current circumstances. Huachang Chemical will take this opportunity to focus on transformation driven by 'intelligence, green initiatives, and safety,' actively cultivating new growth momentum in the industry.
On one hand, technology renovation projects are implemented to ensure carbon reduction, pollution control, greening, and improvement of inherent safety levels. For example, accelerating the advancement of technology renovation projects such as 'intelligent transformation of ammonia synthesis production units,' 'energy-saving and carbon-reducing urea units and reconstruction of the central control room,' and 'expanding the production of 300,000 tons per year of a new series of polyol materials.'
On the other hand, accelerate the cultivation of new growth drivers. The company will focus on seeking breakthroughs in two major areas: new chemical materials and new types of fertilizers, aiming to increase the revenue of these businesses by 3 billion yuan by 2026. In the field of carbonyl synthesis chemical materials, the company will leverage innovative results obtained from preliminary pilot tests to expand the high value-added specialty chemicals business; in the field of new fertilizers, it is committed to developing functional fertilizer products such as efficient and environmentally friendly slow/controlled-release fertilizers and water-soluble fertilizers to serve modern agriculture.
Li Qianhua said that in order to implement the policy of prioritizing quality and efficiency, we plan to rely on independent innovation to give new patterns to old products. The company's latest phenylenediamine project has broken through existing processes and raw material routes. First, it significantly reduces production costs, potentially lowering them by 40%–50% compared to the current domestic advanced level; second, product quality is greatly improved, creating conditions for the development of high-end downstream products; third, the process is safer and more controllable, reducing major hazard processes; fourth, by recycling by-products, it achieves green, environmentally friendly, and sustainable development.
By adopting independent innovation technologies, the cost of phenylenediamine can be reduced and its quality improved, which can significantly lower the costs of downstream products (such as aramid fibers and high-end polyurethane), expand application areas, increase market scale, and bring new opportunities for upgrading the manufacturing industry and consumer goods.
Source: Sinochem News