U.S. Chemical Industry Faces Earnings Challenges Amid Global Supply Glut and Trade Tensions

The U.S. chemical industry is poised to report another quarter of subdued earnings, as a global oversupply—driven by China's rapid expansion in ethylene production—combines with weakened industrial demand and ongoing trade tensions to compress profit margins.

Major American chemical producers, including LyondellBasell, Dow, Sherwin-Williams, Celanese, and Eastman Chemical, are navigating a complex landscape marked by an ethylene supply glut and the adverse effects of tariffs on key markets. With the downturn now entering its 38th month, the industry is seeking strategies to mitigate these pressures and restore financial stability.

China's ethylene production capacity has seen significant growth, reaching approximately 66 million tons per year by 2025, accounting for about 23% of the global capacity. This expansion is part of China's broader strategy to achieve self-sufficiency in petrochemicals, reducing its reliance on imports. However, this rapid growth has led to a global supply glut, exerting downward pressure on ethylene prices and squeezing profit margins for producers worldwide.

In Europe, chemical companies are contending with multiple challenges, including high energy costs, aging infrastructure, and stringent environmental regulations. These factors have contributed to several plant closures across the continent. The European Chemical Industry Council (Cefic) has highlighted the competitive pressure from China's low-cost production model, noting that China has become the EU27’s largest chemical supplier, with shipments exceeding €17 billion in the first half of 2025.

In the United States, demand for commodity chemicals remains tepid, influenced by weak construction and manufacturing activity. Additionally, tariffs of at least 15% on European imports have adversely affected downstream demand from sectors such as automotive and consumer goods. These trade policies have further strained volumes and profitability for U.S. chemical producers.

In response to these industry headwinds, companies are reevaluating their portfolios and making strategic adjustments. For instance, Carlyle's acquisition of BASF's coatings unit reflects a broader trend of adaptation within the sector. Investors are keenly observing upcoming earnings reports for insights into cost control measures, potential demand recovery, and overall market sentiment amid ongoing trade and geopolitical uncertainties.

Several major chemical companies are scheduled to release their third-quarter earnings reports in the coming weeks:

• Dow Inc.: October 23, 2025
• LyondellBasell Industries NV: October 31, 2025
• Eastman Chemical Co.: November 3, 2025

As of October 22, 2025, the stock performance of these companies is as follows:

• LyondellBasell Industries NV (LYB): Trading at $45.20, a decrease of $0.01 (-0.00022%) from the previous close.
• Dow Inc. (DOW): Trading at $21.70, down $0.045 (-0.00207%) from the previous close.
• Sherwin-Williams Co. (SHW): Trading at $333.81, a decline of $4.70 (-0.01389%) from the previous close.
• Celanese Corp (CE): Trading at $40.44, down $1.19 (-0.02860%) from the previous close.
• Eastman Chemical Co. (EMN): Trading at $61.20, a decrease of $0.97 (-0.01561%) from the previous close.

As the U.S. chemical industry confronts a prolonged earnings downturn driven by global oversupply and trade tensions, companies are exploring strategic adaptations to navigate these challenges. The upcoming earnings reports from major producers will provide critical insights into the sector's resilience and future direction.