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Europe's Chemical Giants Brace for Shakeup Amid Global Shifts
25 Dec
Summary
- Europe's chemical output share dropped to 13% from 27% over two decades.
- Soaring energy costs and global competition challenge Europe's industry.
- Significant job losses expected as German chemical output nears 1990s levels.
Europe's once-dominant chemical industry is experiencing a profound crisis, with its share of global output falling to 13% from 27% over the past twenty years, while China's share has dramatically increased to 46%. This shift has transformed Europe into a net importer of chemicals, facing a challenging outlook driven by sluggish demand, soaring energy prices, and intense global competition. Stricter emissions regulations, set to be enforced from 2026, further exacerbate the situation.
The €635 billion industry is already seeing major players like Akzo Nobel NV and BASF SE pursue mergers and asset sales to adapt. German chemical output is reportedly nearing 1990s levels, with significant capacity reductions and job losses projected. Companies are grappling with unsustainable profit levels due to high operational costs, including energy bills that remain substantially higher than in the US and Asia.
This challenging environment is poised to trigger substantial industry consolidation, including mergers, acquisitions, and restructurings. While potential government interventions and shifts in global supply chains offer some hope, the sector is expected to contract in early 2026, with only a slow recovery anticipated by 2027. The coming years will likely see European chemical companies making difficult strategic choices to navigate this competitive landscape.
