Europe's Chemical Industry Loses 37 Mt Capacity as Closures Surge
Europe's chemical industry is facing an unprecedented contraction, with plant closures accelerating sharply and new investment collapsing, raising serious concerns over the sector's long-term competitiveness and survival, according to a report released on January 28 by the European Chemical Industry Council (Cefic).
The report shows that between 2022 and 2025, capacity closures in Europe's chemical sector increased sixfold, resulting in a cumulative loss of 37 million tonnes of production capacity over four years. This represents around 9% of total European chemical capacity and has led to the direct loss of approximately 20,000 jobs. At the same time, new investments and capital expenditure have fallen dramatically, signaling growing pessimism within the industry about Europe's industrial outlook.
Cefic Director General Marco Mensink warned that the sector is under extreme strain. 'The European chemical industry is under enormous pressure and is close to a breaking point. The pace of company closures has doubled within a single year,' he said. 'Even more alarming is that annual investment has been cut by half, almost down to zero. The situation is worsening, not improving. Decisive action is required this year, and it must translate directly into production at plant level.'
According to the report, announced plant closures rose from 2.9 million tonnes in 2022 to 8.7 million tonnes in 2023, remained high at 8.0 million tonnes in 2024, and then surged to 17.2 million tonnes in 2025. By the end of 2025, total closed capacity had reached 37 million tonnes.
By sector, upstream petrochemicals have been the hardest hit, with capacity shrinking by 14% and closures totaling 17.8 million tonnes, accounting for 48% of the total. Basic inorganic chemicals followed with 11.7 million tonnes, or 32%, while polymers recorded 5.4 million tonnes, or 15%. Specialty chemicals accounted for 2.0 million tonnes, representing 5% of closures.
The wave of shutdowns has spread across Europe, driven largely by a lack of energy cost competitiveness. Germany has been the most affected country, with 8.8 million tonnes of capacity closed, or 25% of the total. The Netherlands followed with 7.2 million tonnes (20%), ahead of the United Kingdom with 4.5 million tonnes (12%), France with 3.9 million tonnes (10%), Italy with 2.5 million tonnes (7%), Belgium with 2.3 million tonnes (6%), and Spain with 1.6 million tonnes (4%). Other European countries accounted for a combined 6.0 million tonnes, or 16%.
Beyond direct job losses, Cefic highlighted the broader socio-economic impact of the closures, warning that around 89,000 indirect jobs across Europe are also at risk as supply chains and downstream industries are affected.
Compounding the crisis, new investment and capital spending have fallen off a cliff. Announced annual investment volumes in the European chemical industry plunged from 2.7 million tonnes in 2022 to just 0.3 million tonnes in 2025, with total announced investments of about 7.0 million tonnes over the four-year period. Confirmed capital expenditure dropped by 81%, from €7.6 billion in 2022 to €1.5 billion in 2025.
The report notes that this decline reflects a major shift in investment priorities. Whereas previous years saw substantial spending on innovation areas such as electrification, hydrogen-based feedstocks and circular plastics, current activity is largely limited to a small number of pilot projects.
Cefic concluded that because plant closures are occurring far faster than new investments can be developed, Europe's chemical industry is shrinking. This trend underscores growing uncertainty across the sector and raises serious questions about whether Europe can continue to sustain a competitive and resilient industrial base.