Recently, the "Competitiveness of the European Chemical Industry" research report by the European Chemical Industry Council (Cefic) stated that from 2023 to 2024, the European chemical industry was caught in a market environment of severe oversupply. 11 million tons per year of chemical production capacity was shut down, affecting 21 major manufacturing base plants. For some time to come, due to the lack of clear improvement in market fundamentals, the wave of closures of European chemical production capacity may continue.
Cefic's report shows that among various sub - industries, the "collapse" of the European aromatics industry is the most severe. In 2023 and 2024, the permanently closed aromatics production capacity accounted for 41% of the total closed chemical production capacity, including several cumene, styrene, ethylbenzene and toluene diisocyanate projects. In addition, during the same period, olefin production capacity accounted for 26% of the announced permanently closed production capacity, including ethylene, propylene and naphtha cracker production capacity, while polymers accounted for 23%, and the rest accounted for 10%.
Cefic's research indicates that the situation will not improve after 2025. The global petrochemical production capacity construction is still increasing continuously. Millions of tons of chemicals are seeking new markets and are affecting the European market. Due to the continuous growth of global supply and the slowdown of current demand growth, the global utilization rate of major chemicals in the chemical industry was approximately 75% in 2023, and it is expected to remain at a low level of 74% - 76% until 2028. Unless there is more market restructuring or demand recovers more strongly than expected, the wave of industry closures will continue.
The closure of cracker units has also put pressure on the downstream chemical industry. Cefic reaffirmed that closing a naphtha cracker unit is a very difficult decision for enterprises, as cracker units are the link between the refining and petrochemical industries, building synergies between upstream and downstream. However, nearly 3 million tons per year of cracker units in the EU were forced to close from 2023 to 2024, bringing huge pressure to the chemical industry. Cefic said that European cracker plants are facing challenges from multiple aspects, including weak local demand, a rapid increase in naphtha cracker production capacity in Asia, and increased production capacity in other regions, especially in the United States and the Middle East. The company said that the announced 3 million tons per year of cracking furnaces to be closed account for about 5% of Europe's production capacity. ExxonMobil, Saudi Basic Industries Corporation, and Versalis, a subsidiary of Eni Group, announced the closure of cracker units in France, the Netherlands, and Italy respectively last year.
Cefic also said that the closure of European chemical production capacity and low utilization rates have had a negative impact on both industry development and decarbonization. Cefic listed the upstream bulk chemical value chains including ethylene, propylene, ammonia, and chlor - alkali as the main chemical monomers at the "core of the European decarbonization path", but these industries have suffered huge losses due to rising energy costs, weak demand, and low utilization rates. Cefic said that the main problem is that the closure of these announced factories has caused environmental problems. In order to restore resource efficiency, society and the industry also need additional support to help these closed - down assets carry out green transformation.
In terms of industry development, the market environment represented by the closure of production capacity has restricted the development of new industry technologies. Cefic emphasized that bio - based polymers are an area where Europe has a leading edge and development aspirations, but the European chemical industry needs more support to ensure that some key technologies can be broken through. However, in the market context of chemical production capacity closures, the competition among global chemical companies is intensifying. Europe must support the development of the chemical industry to make it a platform for success and growth in Europe.
Cefic stated in the report that there is still hope for the European chemical industry, and there are still several sub - industries with advantageous technologies and markets. Cefic said that in 2023, the sales of the European chemical industry were approximately 655 billion euros, and through the complex and diverse chemical value chains, it created approximately 165 billion euros of added value, still being an important part of the European economy. The European chemical industry urgently needs social and political support to reduce the negative impact of the wave of chemical production capacity closures.
