The End Game in European Chemicals
A Paradigm Shift is happening.
The dominoes are falling in the European Chemical Industry. It has entered a critical phase of contraction, restructuring / consolidation due to massive Chinese overcapacities and high energy / feedstock cost.
The changed demand side of the supply & demand equation combined with declining growth rates, negative demographics and tariffs underscore the structural change. This is not cyclical.
Non-European players such as LyondellBasell, Dow, ExxonMobil, Huntsman etc are closing capacities / sites in Europe and exiting Europe, their previous Business Models no longer fit for the future.
I provide independent advice / analysis on a tailor made basis to navigate the European chemicals landscape
The European Collapse
Deindustrialisation in Europe is gaining pace. New long term strategies / business models are required as imports / commoditization accelerates. Massive overcapacities in China, Middle East and increasingly the US have changed the game.
Chinese self sufficiency and further capacity build is driving the pivot, changing trade flows. State supported enterprises have changed the name of the game.
The EU policy framework is no longer fit for purpose.
Tariff Wars
The unprecedented US policy attack on the status quo trading system, the anchor of globalisation and the principle of comparative advantage changed the rules in 2025.
The US is upping its LNG, ethane, ethylene and polyethylene exports, as well as propane. The US has to increase its exports due to its capacity build at a time when domestic growth is flat and ethane prices increasing. The US chemical market is looking ripe for consolidation as co. market capitalisation has crashed as a result of e.g. poor acquisitions, commoditisation, the changed demand equation and the costly retreat from Europe.
Value Chains under pressure
Many value chains are under structural pressure starting at the steam cracker level.
Main downstream commodity polymers such as PE, PP, PET, PVC face capacity reductions / consolidation.
Engineering plastics (polyamides PA 6 / PA 6,6 and their precursors e.g. caprolactam, adipic acid, hexamethylenediamine HMD) is already seeing insolvencies / closures not just in Europe but also in the US.
Fine and intermediate chemicals are experiencing the same threat: e.g. record low vitamin,butanediol (BDO) etc prices.
The demand correlation to GDP has changed significantly
The focus of the industry appears to be on global overcapacities & ongoing capacity build i.e the supply side. Little attention is being paid to the demand outlook, the other half of the equation.
The supply side is easier for the industry and consultants to grasp as it is easier to calculate, more granular, tracking expansions.
High level references to "GDP plus" growth rates for chemicals still abound, yet are obsolete the world has changed. US 10K reports from certain majors appear more and more detached from reality.
Demand is being massively disrupted: Disruptors are e.g. demogaphic collapse in key countries, recycling technologies & sustainability initiatives which cannibalise/reduce virgin demand. Downgauging i.e. continual reduction in the quantities required is significant.
Regulatory framework changes i.e. Single Use Plastic bans, societal influences create a new demand equation.
In summary, the demand trajectory has changed significantly.