Globalization of chemical raw material production capacity

Tom
19 May 2025

2025 has seen a strategic reshuffle of global chemical raw material production capacity, as enterprises seek to optimize cost efficiency, mitigate supply chain risks, and align with regional demand centers.

For low-value, energy-intensive basic chemicals (e.g., ethylene, ammonia), capacity is shifting to regions with abundant, low-cost energy: ExxonMobil has expanded its ethylene capacity in Qatar by 1.8 million tons/year, leveraging the country’s cheap natural gas (costing $1.5/mmBtu, vs. $4/mmBtu in Europe); Saudi Aramco is building a 2 million-ton/year ammonia plant in Saudi Arabia, targeting export to Asia’s fertilizer and chemical markets.

For high-value, technology-intensive materials (e.g., electronic chemicals, new energy materials), capacity is being located closer to downstream manufacturing hubs: LG Chem has built a 30,000-ton/year electronic-grade hydrofluoric acid plant in Vietnam, supplying the country’s growing semiconductor packaging industry; BASF has launched a 50,000-ton/year lithium battery electrolyte plant in Mexico, catering to North America’s EV manufacturing cluster (led by Tesla and Ford).

This layout also aims to reduce geopolitical risks: many Western chemical firms are diversifying production away from single regions—Dow has added a 20,000-ton/year specialty polymer plant in Southeast Asia to complement its European facilities, while Chinese chemical enterprises are building basic chemical plants in the Middle East to secure raw material supply. By 2027, it’s estimated that 60% of global high-end chemical capacity will be located within 500km of major downstream demand centers, up from 45% in 2020.

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