Europe’s chemical industry is losing production capacity at an accelerating pace, with plant closures surging to levels not seen in decades as companies cite crippling energy costs and a regulatory environment that makes continental operations uncompetitive against Asian rivals.
Data from the European Chemical Industry Council (Cefic) shows that announced capacity closures reached 17.2 million tonnes in 2025 alone, more than double the figure from the previous year. Since 2022, cumulative closures have reached approximately 37 million tonnes, representing roughly nine percent of Europe’s total chemical production capacity.
Energy Costs Drive Exodus
In half of closure cases, companies identified energy cost competitiveness as the primary reason for shutting down facilities. Demand-related considerations accounted for 19 percent of decisions, overcapacity for nine percent, and regulatory factors for eight percent. Germany has been hardest hit, with 8.8 million tonnes of announced closures, followed by the Netherlands at 7.2 million tonnes, the United Kingdom at 4.5 million tonnes, and France at 3.9 million tonnes.
Upstream petrochemicals, which form the foundation of the broader manufacturing supply chain, account for 48 percent of the shuttered capacity. Nine major steam crackers have closed, representing a 16 percent net reduction in Europe’s steam cracking capacity. The closures cascade through downstream industries that depend on chemical feedstocks, from automotive and construction to pharmaceuticals and consumer goods.
| Country | Announced Closures (Mt) |
|---|---|
| Germany | 8.8 |
| Netherlands | 7.2 |
| United Kingdom | 4.5 |
| France | 3.9 |
| Italy | 2.5 |
| Belgium | 2.3 |
| Spain | 1.6 |
Investment Collapses
Annual capacity investments in the sector have plummeted from 2.7 million tonnes in 2022 to just 300,000 tonnes projected for 2025, an 86 percent decline. Between 2022 and 2025, total new investments will account for only seven million tonnes of capacity, far below the losses being sustained. Cefic Director General Marco Mensink warned that “the rate of closures has doubled in a year, and even worse, annual investments are half and close to zero.”
The closure wave has already cost an estimated 20,000 direct jobs, with 89,000 additional positions at risk in the wider supply chain. Major chemical firms including BASF, Dow, Shell, TotalEnergies, and INEOS have all announced or completed European plant shutdowns in recent years, with several citing the shift of investment toward Chinese crude-to-chemicals complexes that operate at lower cost.
The crisis exposes a growing structural disadvantage for European manufacturers, who face natural gas prices several times higher than those in the United States and regulatory compliance costs that Asian competitors largely avoid. Without policy intervention, industry leaders warn, Europe risks becoming permanently dependent on chemical imports from the very regions that are absorbing its production capacity.
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