European Chemical Demand Set to Stay Flat at 2025 Levels
A slew of second quarter 2025 earnings statements from several chemical majors highlights just how parlous the European chemical industry is and how far off any significant recovery appears.
BASF announced that lower chemicals sales pushed group sales in Q2 2025 down by €342 ($394.22) million to €15.8 billion from Q2 2024, while Dow reported net sales in Q2 2025 declined by 7% to $10.1 billion from the like quarter a year ago. Shell saw sales volumes drop to 2.16 million metric tons in Q2 2025 from 2.81 million mt in Q1 2025.
“Dow and some of our industry peers are noting expectations that the global macroeconomic backdrop will remain challenged,” Dow’s chief financial officer, Jeff Tate, said on its Q2 2025 earnings call. “Ongoing tariff and geopolitical uncertainty have impacted demand patterns especially in the industrial, infrastructure and durable goods sectors. This has contributed to downward revision in global GDP forecast leading to expectations of a protracted down cycle across many of the end markets Dow serves.”
Demand shows limited change to 2030
OPIS has heard similar statements from sources throughout 2024 and to date in 2025, even though in 2024 expectations were that 2025 would see a rebound in the industry’s fortunes. This has failed to materialize and so the question the industry faces is whether there is any prospect of an upturn in its fortune over the balance of this decade.
A look at Q2 2025 results indicates that chemical companies do not expect a pickup in demand in 2025, while demand data from Chemical Market Analytics (CMA) by OPIS , a Dow Jones company, for the period to 2030 points to a barely discernible uptick in demand.
No significant recovery in demand is forecast by CMA for 2026 or indeed in the five years to Dec. 31, 2030.
Between 2020 and 2025 to date, ethylene demand has slumped by 3.02 million mt to 15.96 million mt. Aromatics demand squeezed by 3.28 million mt to 10.65 million mt over the same period, CMA data show.
Ethylene demand will ease to 15.60 million mt in 2026 and to 15.38 million mt in 2030 from 2025 levels. Aromatics demand will ease to 10.64 million mt in 2026, although is forecast to grow to 10.934 million mt in 2030.
Yet, Dow’s CEO sounded more optimistic over global operating rates for ethylene and polyethylene, suggesting a return to 90% in the longer term, an indication of greater buying interest. Still, he cautioned that Middle East and U.S. operating rates could be higher than European or Asian levels because of their cost advantage.
Measures the European chemicals industry can take to improve its fortune
Given that the European chemical sector is not expected to show much improvement over the coming years, the most obvious solution is to cut capacity to match demand, as witnessed by the large volume of capacity shutdown permanently in Europe over the past few years, including in 2025.
The European chemical industry forum Cefic notes that between 2023 and 2024, 11 million mt of announced capacity was set to be closed in Europe permanently. Yet some producers are seeking buyers for assets rather than shuttering them permanently and so relying on reducing capacity alone may not provide a long-term solution to the sector’s problems.
Another solution is to provide greater support for the sector or, at the least, create a level playing field for it. Industry representatives and leaders have been hammering this point home for a few years, but their calls have become louder and more strident this year.
The main areas the industry seeks assistance with are energy costs, namely natural gas prices, and tax obligations in the form of carbon and other environmental regulations.
However, to date, the European Union has given no indication it is heeding these calls.
–Reporting by Yazdi Merchant, ymerchant@opisnet.com; Editing by Rob Sheridan, rsheridan@opisnet.com