Europe’s chemical industry eyes a wave of plant closures

The European chemical industry is in dire straits. Several major firms are on the verge of closing plants in the face of weak demand, persistently high natural gas prices, and a looming trade war.

“Chemical plants are up for sale and closing on an unprecedented scale in Europe,” says Richard John Carter, an independent consultant and former senior executive at BASF. Hard times in Europe’s automotive sector, one of the chemical industry’s main customers, are part of the problem, Carter says.

“It is ten past twelve—our industry is beyond the breaking point,” Marco Mensink, director general of the European Chemical Industry Council, an industry association, says in a recent press release. “For the sake of our industry and the 1.2 million workers it directly employs, we need urgent action and affordable energy.”

Chemical firms in Germany appear to be especially vulnerable to the economic conditions. IG BCE, a German union for mining, chemical, and energy employees, warned at its annual press conference in late January that more than 200 German industrial plants—including chemical facilities—could soon close or have to scale back output. Ultimately, 25,000 jobs could be lost, the union said.

The threat of closures is also present in other European countries. A plastics precursor complex in Maasvlakte, the Netherlands, operated jointly by Covestro and LyondellBasell Industries is at risk of closure, according to news reports citing Dutch unions. It produces propylene oxide and styrene and employs 170. “At this stage, no definitive decisions have been made,” LyondellBasell tells C&EN by email. The company disclosed last May that it may close or sell some of its European petrochemical facilities.

Huntsman Corp. is also reviewing its European operations. “European industry conditions are highly compromised from a combination of high energy costs, overburdening regulation, and excess capacity,” CEO Peter R. Huntsman says in a press release announcing fourth-quarter earnings. “We do not intend to sit idly by, waiting for markets to improve.” The firm plans workforce reductions in its polyurethane segment and may close polyurethane facilities in Europe. It is also assessing strategic options for its European maleic anhydride business.

Meanwhile, in the UK, some 60% of chemical firms surveyed last month by the Chemical Industries Association, an industry group, reported declining sales. “For some parts of the UK chemical industry this increasing lack of competitiveness is simply not sustainable, with announcements of site closures and strategic reviews on the rise,” CIA CEO Steve Elliott says in a statement accompanying the survey.

One major UK facility under threat of closure is Dow’s silicone plant in Barry, Wales. Dow says in an email that, as part of a strategic review of its European assets, it is “assessing alternative siloxanes supply options at our manufacturing site in Barry.” About 850 people are employed there.

Dow also says it has postponed a planned maintenance turnaround required ahead of the reopening of one of its ethylene crackers in Terneuzen, the Netherlands, because of “continued weakened market conditions in the region.”

“Non-European asset owners have little incentive to remain in Europe, where their oldest, smallest, highest-cost plants are located,” Carter says. “They optimize their fleet and produce elsewhere.”