INEOS Restructures as European Chemical Industry Faces Deepening Crisis

Global chemical producers continue to accelerate restructuring efforts amid persistent market weakness, rising costs and overcapacity concerns, with INEOS announcing major operational changes while Europe’s chemical sector remains under significant pressure.

INEOS to Shut North American Polystyrene Plant, Delays Phenol Restart

On June 17, INEOS announced two significant business adjustments affecting its styrenics and phenol operations.

INEOS Styrolution, one of the world's leading styrenics suppliers, said it will permanently close its polystyrene (PS) production site in Channahon, Illinois, United States. The decommissioning and orderly shutdown process is expected to be completed in the fourth quarter of 2026.

The facility, which employs approximately 100 people, has been a key part of INEOS Styrolution’s operations since commencing production in 1960. The site has an annual production capacity of around 400,000 metric tons. The Americas Regional Development Center (RDC), currently located at the facility, will remain in place and continue supporting innovation and market development across the company’s styrenics product portfolio.

As part of its asset optimization strategy, INEOS Styrolution will reduce its North American polystyrene manufacturing footprint from three sites to two, continuing operations at facilities in Decatur, Alabama, and Altamira, Mexico.

Steve Harrington, Chief Executive Officer of INEOS Styrolution, said sustained margin pressure and ongoing industry oversupply have continued to threaten the viability of its North American operations. Following a comprehensive assessment of market conditions, industry utilization rates, plant cost structures and long-term prospects, the company concluded that continued operation of the Channahon facility was no longer economically viable.

Separately, management at INEOS Phenol informed employees at its Doel plant that the planned restart of the facility, originally targeted for the end of 2027, has been postponed.

The company had announced in June last year that the plant could potentially resume operations by late 2027. However, continued volatility in European and global supply-demand conditions has prevented sufficient market recovery to support a restart.

INEOS Phenol stated that the postponement means its Gladbeck site in Germany will continue operating beyond 2027. The company had announced in June 2025 the permanent shutdown of phenol production capacity of 650,000 metric tons per year, along with acetone production, at the Gladbeck facility.

INEOS has also divested two businesses this year. In May, INEOS Enterprises agreed to sell INEOS Calabrian, its ultra-pure sulfur dioxide and derivatives business, to Ecovyst, with completion expected by the end of June 2026. In April, INEOS agreed to sell its Italian chlor-alkali business to Esseco Industrial, with the transaction expected to close in 2026.

Former DOMO Chemical Unit Files for Insolvency Months After Sale

On June 19, ICIS reported that German caprolactam and polyamide producer Leuna-Polyamid GmbH had initiated insolvency proceedings less than three months after being acquired from DOMO Chemical.

In December 2025, three German subsidiaries of DOMO Chemical filed for insolvency: Domo Chemicals GmbH, Domo Caproleuna GmbH and Domo Engineering Plastics GmbH. The decision affected approximately 585 employees, including operations at the Leuna site and the Premnitz Domo engineering plastics plant in Germany.

The facilities manufacture intermediates including cumene, phenol, acetone, cyclohexanone, caprolactam and ammonium sulfate, as well as nylon 6 resins and engineering plastics.

In early April 2026, chemical park operator InfraLeuna and epoxy resin producer Leuna-Harze acquired the Leuna facility from DOMO Chemical to preserve the integrity of the Leuna industrial site following the insolvency filings. The operations were subsequently transferred to a newly established entity, Leuna-Polyamid GmbH.

The company later encountered liquidity difficulties as economic conditions deteriorated and prices surged.

Leuna-Polyamid GmbH submitted an insolvency application to the Halle District Court on June 17. Managing Director Martin Naundorf said the court had not yet responded to the filing and that the co-owners could seek additional investment in the business.

According to the company, the conflict between the United States and Iran significantly altered the economic environment, driving prices for key raw materials including sulfur, benzene and propylene higher by between 60% and 100%, while also disrupting supply availability.

Sulfur supplies required for production were not adequately secured, further limiting utilization rates at the manufacturing facilities. Although the company reported profitable operations in April and May, it had not accumulated sufficient financial reserves to absorb the sharp increase in costs. Existing orders will be fulfilled as scheduled, while new orders will be reviewed during the insolvency process.

The latest insolvency follows a broader wave of restructuring across the global chemical industry. Companies including Huntsman and Olin have pursued consolidation, while BASF, Dow, Wacker and Evonik have implemented workforce reductions and site closures. LyondellBasell and SABIC have also moved to divest European assets.

Earlier in May, U.S. specialty materials supplier Trinseo and UK chemical recycling company Plastic Energy announced restructuring through insolvency-related processes.

European Chemical Sector Remains Under Pressure

On June 22, the European Chemical Industry Council (Cefic) released its Chemical Trends Report for the first quarter of 2026, showing that EU chemical industry capacity utilization remained near historic lows at approximately 74%, significantly below the long-term average of 81.3% and below overall EU manufacturing levels.

Chemical production in the first quarter of 2026 declined 3.2% year-on-year, underscoring the fragility of current market conditions.

At the beginning of 2026, EU chemical trade weakened substantially. Export values fell by €4.6 billion, or 12.4%, while imports declined by €4.8 billion, or 15.7%, reflecting both weak external demand and contracting domestic industrial activity.

European chemical output fell 2.4% in 2025 and remained 11% below average levels recorded between 2014 and 2019. The decline matched the rate recorded in 2024 and exceeded earlier forecasts of around 2%.

Petrochemicals experienced the most severe downturn, with output declining by more than 10%. Polymer production fell 6.9%, while basic inorganic chemicals declined 2.7%. Most specialty chemical segments recorded declines of around 2%, with dyes and pigments falling 7%.

Current European chemical capacity utilization remains well below historical averages and significantly lower than levels observed in the United States.

During the first eleven months of 2025, European chemical industry sales declined 3.2% year-on-year, while chemical product prices fell 0.5% for the full year.

From January to October 2025, European chemical exports declined 3.8% compared with the previous year. The sector recorded a trade surplus of €31.3 billion, down €7.3 billion from the corresponding period in 2024.

Specialty chemicals remained the largest export category, with exports totaling €61.7 billion, while petrochemicals represented the largest import category at €58.5 billion. Specialty chemicals and consumer chemicals each generated trade surpluses exceeding €24 billion, whereas petrochemicals recorded the largest trade deficit at €19.2 billion.

Cefic noted that despite slight improvement at the start of 2026, weak demand, declining production and intensifying global competition continue to weigh on the sector. Rising global trade risks, including U.S. policy measures and geopolitical tensions affecting key shipping routes such as the Strait of Hormuz, have added further uncertainty, with the full impact remaining difficult to assess.

Overall, the report concluded that the EU chemical industry has entered a phase of vulnerability rather than recovery. Unless energy costs decline sustainably, demand strengthens and global trade conditions stabilize, the outlook remains weak, with a continued erosion of Europe’s chemical manufacturing base remaining a significant medium-term risk.