Europe’s Chemical Industry Faces Fight for Survival
The Cefic Chemical Trends Report published at the start of March underscores the perilous state of Europe’s chemical industry and its fight for its survival, indicating urgent action is needed for the chemical sector to survive and support European industry as it has for much of the 20th century and the first decade of the 21st century.
Sir Jim Ratcliffe, chairman and CEO of INEOS, told the Antwerp Declaration Community Community – representing more than 1,300 companies, associations and trade unions across Europe – in February that “current conditions for Europe’s chemical industry are unsurvivable without immediate intervention.”
However, he added: “With the right decisions now, Europe can rebuild a competitive, resilient chemical industry that supports healthcare, clean water, food, defense and energy security.”
European Union Council President António Costa said later the same month that “we have a clear priority – to strengthen economic growth in Europe. This is essential for our prosperity, to create quality jobs, and to sustain our economic social model.”
The comments by Costa along with the commitment to strengthen European industrial competitiveness will be welcome news for Europe’s chemical sector. The question is whether the actions proposed by the EU to support European industry are too little too late, especially as the EU did not mention chemicals as a strategic industry.
Yet those industries the EU sees as strategic to Europe – payment systems, defense, space, clean tech, quantum technologies and artificial intelligence – all depend on the chemical sector to provide many of the products they need.
European chemical capacity closures increase amid rising energy costs
Between 2022 and 2025, plant closures in Europe grew sixfold in capacity from 2.9 million metric tons/year to 17.2 million mt/year, according to Cefic data. Between 2024 and 2025, 37 million mt was permanently closed, representing 9% of total European chemical capacity.
The report noted 49% of the closure announcements cited lack of energy cost competitiveness, essentially higher energy and carbon prices, as the main driving force of the plant’s shutdown.
Cefic data showed that European natural gas prices were on average two-and-a-half times more than those in the United States throughout 2025. It added European electricity prices are also much greater than in the U.S.
Investment, on the other hand, has fallen in the last few years, sliding to 0.3 million mt of invested capacity in 2025 from 2.7 million mt in 2022. In the twelve months to December 2025 there was an 86% decline in investments in the sector, Cefic data showed. Some 36% of confirmed investment were taken because of a positive demand outlook for products produced by the invested capacity.
Moreover, most of the investment is in products that will supply the battery value chain, emissions reduction and recycling, the former two highlighted by the EU as strategic industries. That illustrates just how critical the chemical sector is in helping the EU achieve its goal of improving European industry’s competitiveness.
The higher rate of plant closures over investment in new capacity meant that in the three-year period 2022-2025 the European chemical industry lost 30.2 million mt of capacity, along with 20,000 directly-linked and 89,000 indirectly jobs across Europe.
Cefic also suggested the EU Commission’s business and consumer survey highlighted the waning confidence in the EU27 chemical industry in 2025 compared to 2024.
This is also reflected in business sentiment with most chemical firms surveyed being more pessimistic over the industry’s outlook, as production trends of observed production and future expectations of production both worsened in 2025.
“The persistently low level of business confidence remains a core concern of the chemical sector in Europe,” said Cefic in the report.
Production, utilization rates contract in 2025
Even though output across the EU manufacturing sector rose by 1.6% in 2025 compared to 2024, most downstream users of chemicals reported a decline in output. The EU27 chemical industry, subsequently, reported an output decline of 2.4%, significantly underperforming the EU27 manufacturing average, pointing to a clear disconnect between chemical production and overall manufacturing output. The output of the EU27 chemical industry remains 11% below the pre-crisis levels of 2014 to 2019.
Demand declined despite a 0.6% reduction in chemical prices in 2025 from the previous year. Weak demand also impacted chemical sales value, which shrank by 3.2% in the first eleven months of 2025 versus the same period in 2024.
Chemical production fell throughout Europe in 2025 but at differing rates. The Netherlands, home of the Rotterdam chemical hub, registered a decline of 4.9%. France saw its production decrease by 2.9%. German production eased by 3.3%. Belgian output edged lower by 1.3%. Poland and Italy registered a decline of less than 3.0% each. Spain, however, reported a modest increase of less than 1%.
Uncertainty over future demand, the Cefic report observed, continues to penalize investment, and forecasts for 2026 are modest even before the Iran conflict has upended many demand forecasts.
The combination of weak demand and low confidence may be why Cefic said that utilization rates for EU27 chemical capacity remain at historical low levels and, more crucially, below the U.S. average.
Petrochemicals were more impacted by the economic recession than chemical downstream sectors, as they recorded a production decrease of more than 10%. Polymers, dyes and pigments posted a 7% fall in production. Basic inorganics registered a decline of 2.7%. Output in most specialty sub-sectors dropped by less than 2% in 2025 compared to 2024, said Cefic.
EU chemical sector trade deficit widens in 2025
From January to October 2025, EU27 chemical exports decreased by 3.8% in comparison to the same ten months in 2024, while EU27 chemical imports increased by 0.1%.
The EU27 chemicals trade deficit amounted to 9.1 million mt in the first ten months of 2025, up by 6.1 million mt compared to 2024. Basic inorganics generated the largest trade deficit at 6.3 million mt, followed by petrochemicals 4.7 million mt and polymers at 3 million mt. Specialty chemicals and consumer chemicals continue to generate a trade surplus of more than 1 million mt each in January to October 2025.
As a result, the EU27 chemicals trade surplus amounted to €31.3 billion ($36 billion) in the first ten months of 2025, down by €7.3 billion from 2024.
This all illustrates why so many chemical company executives fear the industry is in danger of fading away.
“The time for discussion is over,” Ratcliffe urged political and industry leaders in February. “Europe must act now to create the conditions in which industry can survive and invest in Europe again.”
Without such action, the European chemical industry will be a pale shadow of its former strength.
At a time when security of energy and supply of key commodities, including chemicals, is shown to be a necessity rather than a luxury, Europe needs to take decisive action to safeguard its own chemical industry to ensure security of supply for its industries rather than rely on overseas producers.
Reporting by Yazdi Merchant, ymerchant@opisnet.com; Editing by Rob Sheridan, rsheridan@opisnet.com