S&P Global Ratings expects the Asia-Pacific chemical sector's glut to continue, which will further constrain earnings, according to a recent release.

The rating agency forecasts dampened utilization and product spreads across the region's commodity chemicals until 2027 due to overcapacity in China and narrow demand.

The region continues to face heightened downside risks despite plans by ethylene producers to reduce regional capacity in the next few years, especially given China's lingering property sector weakness and weak domestic consumption, S&P said.

The rating agency believes credit profiles will fall to historically low levels as structural weaknesses in product margins counteract capacity rationalization, cost control, and product changes.

This will especially impact export-tied producers, with S&P saying about 30% of rated chemical companies in the region holds a negative rating bias.