On January 28, the European Chemical Industry Council (Cefic) released a landmark industry report, revealing that the European chemical industry has suffered severe shocks between 2022 and 2025. The scale of capacity shutdowns has surged dramatically, with employment and investment under simultaneous pressure, leading to profound shifts in the global chemical industry landscape. According to the report, over just four years, the shutdown capacity in Europe’s chemical industry increased sixfold compared to previous levels, reaching a cumulative total of 37 million tons, accounting for approximately 9% of Europe’s total chemical production capacity. This wave of industry-wide "capacity reduction" has had far-reaching impacts, directly resulting in the loss of around 20,000 jobs and putting nearly 89,000 additional positions at potential risk, posing a severe challenge to the industry’s employment ecosystem.

From a sectoral perspective, the shutdowns exhibit distinct structural characteristics. The upstream petrochemical sector has been hit the hardest, with approximately 17.8 million tons of capacity shut down, accounting for 48% of the total. Within this segment, the capacity of core steam cracking units has been reduced by 16%. The basic inorganic chemicals sector follows closely, with 11.7 million tons of capacity shut down, representing 32% of the total. The polymer industry has seen 5.4 million tons of capacity shut down, accounting for 15%, while the specialty chemicals sector has been relatively less affected, with 2 million tons of capacity shut down, making up 5% of the total.

Marco Mensink, Director General of Cefic, issued a stern warning, stating that Europe’s chemical industry is currently under unprecedented pressure and is on the brink of collapse. The pace of corporate capacity shutdowns has doubled within a year. Even more critically, the industry’s annual investment has been halved, nearly reaching a state of zero investment, severely undermining the sector’s future growth momentum.

The downturn in investment is equally pronounced. From 2022 to 2025, the annual new investment and capital expenditure in Europe’s chemical industry, measured in terms of corresponding capacity, plummeted from 2.7 million tons to 300,000 tons, with investment heavily concentrated in the specialty chemicals sector alone. This shift indicates that industry investment has contracted from previously broad-based initiatives covering electrification, hydrogen feedstocks, and circular plastics to only a few remaining pilot projects, significantly reducing innovation and transformation efforts.

The report explicitly identifies uncompetitive energy costs as the primary driver behind the large-scale shutdowns of European chemical companies, with weak demand and industry overcapacity serving as key contributing factors. In terms of national distribution, Germany and the Netherlands have been the most severely affected, with their combined shutdown capacity accounting for 45% of Europe’s total.

Currently, Europe’s chemical industry faces even more severe supply-demand and capacity imbalances, as the rate of corporate shutdowns far exceeds the pace of new investment projects coming online. The industry as a whole continues to shrink, with a projected net capacity reduction of 30.2 million tons. This widening capacity gap not only exacerbates uncertainty in the industry’s development but also raises widespread concerns about Europe’s ability to maintain a competitive and resilient industrial base.

Furthermore, significant shifts have occurred in the global chemical market share. Europe’s share of the global chemicals market has declined to 13%, while China, with 46% of global chemical sales, has become the world’s largest chemical market and the primary source of chemical imports for the European Union. The stark disparity in energy costs remains a core challenge, with European natural gas prices three times higher than those in the United States, continuously squeezing industry profit margins. Coupled with weak market demand, rising import pressures, and persistently low capacity utilization rates, the path to recovery for Europe’s chemical industry remains fraught with challenges.