1. giants focus on action: Europe's upstream chemical plants ushered in a sustained shutdown tide.
On July 7, 2026, Dow Chemical officially announced that the board of directors approved the permanent closure of three upstream core chemical plants in Europe: the Bollen ethylene cracking plant in Germany, China, the Schkobo chlor-alkali and vinyl production facility in Germany, and the Barry basic siloxane plant in Britain, China, with a simultaneous layoff of about 800 people.
Dow is not the case, many international chemical giants continue to shrink Europe's local capacity: Ineos permanently shut down china Germany Gladbeck 650000 tons/year phenol plant leander Basel shut down China's Dutch propylene oxide/styrene joint plant and plans to divest four sets of olefin assets in Europe; Shell shut down two million-ton ethylene crackers in China's Netherlands and China's UK; Total clearly plans to shut down by the end of 2027. China Belgium Antwerp ethylene cracking plant.
Statistics from the European Chemical Industry Council show that from 2022 to 2025, the European chemical industry will permanently withdraw 37 million tons of production capacity, accounting for 9% of the total regional production capacity. The rate of production capacity shutdown will increase 6 times compared with previous years, marking the opening of systematic production capacity clearance in European chemical industry and the continuous transfer of withdrawal capacity to the two major regions of the United States and China.
In terms of the pace of production capacity, the scale of capacity phase-out in Europe in 2025 exceeds the sum of the previous two years, which is a structural cliff contraction and not a short-term cyclical adjustment. China Germany as the core hinterland of European chemical industry, the cumulative shutdown capacity in recent years exceeded 8.8 million tons, accounting for 25% of the total shutdown capacity in Europe. By industry chain, the upstream petrochemical sector shut down production capacity of 17.8 million tons, accounting for 48% of the total exit capacity, steam cracking total capacity reduction of 16%, long-term will disturb the global basic chemical raw material supply stability.
This round of shutdown covers petrochemical source cracking device, phenol, chlor-alkali, basic siloxane and other key basic raw materials, a single set of device permanent exit directly impact the entire downstream industrial chain. Take the Dow project as an example: Germany's Bollen cracking ethylene production capacity of 510000 tons/year; Shi Kobao supporting 250000 tons/year chlorine, 390000 tons/year VCM production capacity; UK Barry siloxane production capacity accounted for 30.5 of the total European base siloxane production capacity. Long-term deduction, the future of Europe or will gradually divest the upstream basic chemical industry, only to retain the lack of local raw materials supporting high-end new materials, specialty chemicals plate.
Three core pain points of 2.: the total loss of cost competitiveness of European chemical industry
the underlying logic of the concentrated exit of the giants is the complete collapse of the competitiveness of local production costs. The CEO of INEOS has publicly stated that high energy costs, combined with carbon tax pressure, are no longer economically viable for local chemical production in Europe, and the industry has long been under pressure from a triple resistance:
- long-term imbalance in energy costs: European natural gas prices have maintained more than three times the North American price for a long time, and natural gas and electricity costs account for more than 60% of the total production costs of chemical companies;
- carbon costs continue to rise: the EU carbon price has been stable for a long time at around 80 euros/tonne, easy to rise and fall, continue to squeeze the profitability of enterprises;
- external supply shocks intensify: China, South Korea, the Middle East a large number of refining and chemical integration projects rely on low-cost raw materials, improve the industrial chain and scale advantages, continue to export cost-effective chemicals to Europe, and continue to squeeze the local market share.
Industry capital flows confirm long-term pessimistic expectations. According to the European Chemical Industry Council, capital expenditure in the European chemical industry is only 1.5 billion euros in 2025, down 81% from 2022. Continued capital outflows mean that new projects are stagnant, existing installations are slowing down, and the probability of restarting capacity that has been shut down is extremely low.
3. global industrial restructuring: chemical production capacity continues to shift outward
multinational enterprise investment focus continues to move out of Europe: BASF continues to promote the 10 billion dollar investment layout. China Guangdong Zhanjiang Integrated Base dow focuses its future business growth on the U.S. Gulf of Mexico region. The global market share released by Europe is mainly undertaken by enterprises in the United States, China and the Middle East.
The United States relies on shale gas resources to form a low-cost ethane advantage, ethane route ethylene production costs about half of the European naphtha route, Dow, ExxonMobil, Shell new capacity concentrated layout of the Gulf Coast.
China by virtue of the advantages of the complete whole industrial chain in 2026 in the Middle East geo-turbulent environment to fully highlight the competitiveness: Japan and South Korea are subject to naphtha supply tight frequent production reduction, China relies on diversified raw material channels to ensure the stable operation of the device, and continue to consolidate the world's largest chemical producer and consumer status. Hengli, Zhejiang Petrochemical, Shenghong and other large-scale private refining capacity continued to release, a number of chemical varieties from import dependence to foreign exports.
Middle East SABIC and other leading enterprises rely on low-cost associated gas resources to continue to expand export-oriented petrochemical projects, to undertake a large number of raw materials high-consumption basic chemical production capacity.
4. industry revelation: Europe's structural recession brings global chemical industry thinking.
There is a general consensus that the European chemical industry has entered a structural recession, which is different from the conventional cyclical downturn. Geopolitical conflict reshaping the regional energy pattern, radical carbon emission policy landing, industry capital investment significantly shrinking three factors superimposed, shake the foundation of the European petrochemical industry, capacity migration is a long-term irreversible trend.
For chinese chemical industry the global industrial transfer opportunities and risks coexist: short-term favorable overseas orders return, local enterprises to seize the global market share; medium-and long-term core task is to get rid of simple scale competition, to achieve the transformation from capacity bearers to technology-driven enterprises. The decline course of the European chemical industry can also provide important lessons for other industrialized regions in the world.
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