Europe’s chemical industry is no longer facing a temporary slowdown. Contraction is becoming the new normal.
According to the European Chemical Industry Council (Cefic), the sector is going through one of the sharpest downturns in its history, both in investment and production.
Investment Nearly Comes to a Standstill
Annual announced investment capacity, which stood at 2.7 million tonnes in 2022, has fallen to just 0.3 million tonnes by 2025.
Total new capacity added over four years amounts to only 7 million tonnes.
Over the same period, confirmed capital expenditure (CAPEX) declined from €7.6 billion to €1.5 billion. This fivefold drop significantly weakens Europe’s global competitiveness in chemicals.
Cefic reports that investment focus has shifted away from broad innovation pathways such as electrification, hydrogen-based feedstocks and circular plastics. In many cases, projects have been reduced to isolated pilot initiatives.
37 Million Tonnes of Closures Reshape Europe’s Production Base
Between 2022 and 2025, announced plant closures reached a cumulative 37 million tonnes of capacity.
This represents approximately 9% of Europe’s total chemical production capacity.
Breakdown of closures:
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Upstream petrochemicals: 17.8 Mt, 48%
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Basic inorganics: 11.7 Mt, 32%
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Polymers: 5.4 Mt, 15%
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Specialty chemicals: 2 Mt, 5%
The shutdown of nine steam crackers is particularly significant. It translates into a net 16% reduction in Europe’s steam-cracking capacity. All of these units are located within integrated chemical clusters, putting pressure not only on individual plants but on entire industrial ecosystems.
Germany and the Netherlands Most Affected
The countries most impacted by closures are:
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Germany, 25%
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Netherlands, 20%
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United Kingdom, 12%
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France, 10%
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Italy, 7%
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Belgium, 6%
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Spain, 4%
Despite being Europe’s largest chemical producer, Germany lags behind France and the Netherlands in terms of investment performance.
Energy Costs as the Primary Driver
Loss of energy cost competitiveness was the main reason behind 49% of plant closures.
Other contributing factors include:
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Weak demand, 19%
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Overcapacity, 9%
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Regulatory pressure, 8%
Energy-intensive European producers are increasingly struggling to compete on cost with counterparts in the United States and the Middle East.
“The Sector Is Breaking”
Cefic Director General Marco Mensink issued a stark warning:
“We are no longer debating whether we are five minutes to midnight. The sector is under severe stress and breaking. Closures are accelerating, while annual investments are close to zero. Unless decisive action is taken this year, with real impact at factory-floor level, the situation will worsen.”
A Critical Moment for European Industry
With closures significantly outpacing new investments, Europe’s chemical industry is clearly contracting.
The impact extends well beyond chemicals, affecting value chains from automotive and packaging to pharmaceuticals and energy.
Whether Europe can maintain a competitive and resilient industrial base will depend on the energy and industrial policy decisions taken over the next 12 months.
