Breaking bad
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SEP / OCT 2025
“ The European chemical industry is at a breaking point.” Official reports put out by industry trade associations hardly ever put things quite so starkly, but CEFIC’ s latest Chemical Trends Report, covering the first seven months of 2025, did. Whilst its findings were particularly acute for commodity products and petrochemicals, fine and speciality chemicals were not exempt.
The competitiveness of the European chemical sector remains well below pre- COVID levels( 2014-2019 average) driven by weak demand and uncompetitive energy prices. The main reason for this, undoubtedly, is gas prices three times higher than in the US, compounded by geopolitical uncertainty and wavering demand.
At 74.6 % in Q3, capacity utilisation in the EU27 is 9.5 % below pre-COVID levels. It remains 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 EU still has a big trade surplus in chemicals, but this fell 17.1 % from € 24.4 billion in 2024 to € 20.1 billion in 1H 2025 as European suppliers struggle to compete in their key export markets of China and the US.
“ Recovery prospects remain uncertain,” the report concludes.“ Demand increase is expected to be limited due to global weak economic conditions. The business trade environment in which European chemical companies are operating is exposed to high risks from global trade disruptions, including US tariffs. As a result, EU27 chemicals output is projected to decline in 2025, reversing the 2.4 % growth seen in 2024.”
If there was any good news, it was that the latest European Commission business and consumer survey, the Economic Sentiment Indicator( ESI) picked up in July. Improved industry confidence was driven by“ managers ' brighter production expectations and slightly improved assessments of the current level of overall order books”.
However, chemicals did not share in the 1.0 % rise in output across the EU27 manufacturing sector from 1H 2024 to 1H 2025. Most downstream users of chemicals reported a decline in output – over 4 % in the automotive sector. The industry itself reported a fall in output of 2.4 %, far below the overall average, and it remains 10 % below pre-COVID levels.
Although there are major variations from one EU member state to another, the chemicals industry still lacks the strong domestic demand needed to achieve significant growth. With prices essentially unchanged since 1H 2024, sales in value decreased by 1.8 % in 1H 2025 compared to the same period in 2024.“ The high level of uncertainty is impacting deeply the European business community,” the report finds.
None of this is very new. A competitiveness study by Advocacy for CEFIC in January also spoke of“ breaking point” after announcements during 2023-4 that some 11 million tonnes / year of capacity will be closed. It concluded that the EU industry’ s competitive position has weakened significantly,“ often resulting in delayed investments or decisions to invest outside of Europe”.
Hyperbole? I don’ t think so. While tales like this rarely lose anything in the telling, the statistics here are all too stark. There is an existential crisis in the European chemicals industry that will not be wished away and there is no particular reason to think that things will get any better this side of 2030. Europe needs a chemical industry; there is a foreseeable future in which it does not have one. We need action.
Dr Andrew Warmington
EDITOR – SPECIALITY CHEMICALS MAGAZINE
SPECCHEMONLINE
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