The first half of 2025 has been ‘disappointing’ for the European Union’s chemical sector, according to industry group Cefic’s Chemical Trends Report Q2, which is based on data released by Eurostat.
Weak demand, uncompetitive energy prices, along with exposure to high risks from global trade disruptions, including US tariffs, means that the EU27 chemicals output is set to decline in 2025, reversing the 2.4% growth see during 2024.
This situation, says Cefic, is a particular issue for commodity products and petrochemicals, where China holds a competitive edge due to large scale and low-cost production. In addition, on a global level, with EU gas prices three times higher than those of the US and expected to remain this way between through to 2030, Europe’s competitive position in global chemical markets is expected to weaken further.
Exacerbating the chemical sector’s problems is weak domestic demand due to a falloff in the downstream sectors. Highlighting automotive, Cefic’s Trends Report indicates that this sector is still experiencing a significant year-on-year decline with the first half of 2025 seeing production decline across the EU27 automotive sector by 4.5%
At 74.6% capacity utilisation in the EU27, chemical sector "remains a key concern" the report said, noting that utilisation has consistently stayed below the EU’s long-term average and the US average since Q3 2022, reflecting ongoing challenges from weak demand and declining business confidence. The EU27 chemicals industry is operating at 9.5% below 2014–2019 capacity.
“The output of the EU27 chemical industry remains 10% below the pre-crisis levels of 2014 to 2019. As major suppliers of products and technologies to key manufacturing sectors, the European chemical industry needs a strong domestic demand to achieve significant growth. Unfortunately, no strong positive changes have been observed so far, and business expectations for most downstream users are still not encouraging,” the report warns.
The domestic decline in chemicals demand has been offset, somewhat, by the growth in EU27 exports during 2025, compared with 2024. But imports also increased during he same period. China accounted for €17.1 billion of chemical imports into the EU27, followed by the US with €15.8 billion and the UK with €9.8 billion. The report notes that Europe relies heavily on the import of chemicals from China which have increased more than significantly over the last twenty years: a rise from less than 1% in 2004, to 5.6% in 2024.
The US is the key destination for EU27 chemical exports, accounting for €23.1 billion in revenue. The UK and China followed accounting for €12.7 billion and €8.8 billion in revenue respectively. The Trends Report notes that: “Europe relies heavily on the export of chemicals to the USA for several products. EU27-US exports account for 18% of extra-EU27 chemical exports in value terms in 2024, significantly down from 22% in 2004.”
Much has been made of the EU’s struggles to compete globally, and the Cefic Trends Report reiterates this highlighting that while global year-on-year chemical production growth stood at 4.2% for the first six months of 2025, the EU27’s dropped by 2.4% for the same period. By comparison China’s growth stands at 7.9% with Brazil and the US coming in at 4.3% and 2.6% respectively.
In recent weeks Dow has said that it is closing its German naptha steam cracker, located in Böhlen, which has a nameplate capacity of 560,000 tpa of ethylene and 285,000tpa of propylene, along with chloral-alkali and vinyl assets in Schkopau, which will shut by the end of 2027.
In addition, the basics siloxans plant, part of Dow’s Performance Materials & Coatings business, located in Barry, Wales, UK is expected to close by the middle of 2026. Dow said that all the closures would support profitability in Europe.
Also closing European production capacity INEOS Phenol said in June, that it is planning to permanently stop production at its site in Gladbeck, Germany. Jim Ratcliffe, Chairman of INEOS said at the time: “This is the consequence of Europe’s total lack of energy competitiveness and the blind devotion to carbon taxation which is leading to a mass deindustrialisation across the continent. Gladbeck is not the first and will definitely not be the last unless the regulators wake up and take action”
Further reading:
• Future of the chemicals industry: Europe's action plan
• Modern Industrial Strategy promises lower energy costs
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