Europe's Chemical Sector Faces Downturn as Aging Plants and Imports Drive Crisis
Europe's chemical sector is grappling with a significant downturn due to plant closures and increased dependence on imported raw materials. The European Commission is intervening to bolster domestic production and preserve the sector's strategic significance.
The average age of steam crackers in Europe, the key facilities for producing ethylene and propylene, exceeds 40 years. This contributes to elevated production costs. Most European facilities rely on naphtha as their primary feedstock, further escalating costs compared to other regions. The sector's reliance on foreign supplies has grown, with Europe now a net importer of ethylene and propylene.
Major chemical firms are shuttering European assets following consecutive years of financial losses. Meanwhile, North America and China are expanding their ethylene production capacities, intensifying global competition. Some member states are advocating for a broader 'Critical Chemicals Act' to safeguard the sector's strategic importance.
INEOS is investing €4 billion in a new ethane cracker in Antwerp, positioning itself to remain a major player in the sector. The companies currently modernizing steam crackers in Antwerp, Dow and ExxonMobil, anticipate completions around 2025 and 2027 respectively. The European Commission plans to support domestic production through expanded state aid and changes to public procurement rules. Up to 40% of the European Union's ethylene production capacity is at medium or high risk of closure.
The European chemical sector's decline is a cause for concern, with aging infrastructure, high production costs, and increased dependence on foreign supplies. However, investments like INEOS's new ethane cracker and the European Commission's support plans aim to revitalize the sector and ensure its strategic importance.
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