More hurt for European chemical firms

The European chemical sector isn’t getting out of its slump quite yet. In fact, a number of indicators suggest that the outlook today is worse than it was at the start of the year.

German chemical executives had hoped that their country’s new government, which is set to receive parliamentary confirmation on May 6, would ease their plight. But there is “little to enthuse investors in energy-intensive German industrials,” says Sebastian Bray, Berenberg Bank’s chemical analyst, in a note to investors.

Instead, leading German companies such as BASF are likely to be casualties of the trade war launched with the tariffs announced April 2 imposed by US president Donald J. Trump. Any commitment by the new German government to cut the price of industrial power is not likely to happen before 2026, Bray states. Meanwhile, “the outlook for Q2 2025 earnings is growing more precarious.”

The UK’s leading industry body, the Chemical Industries Association (CIA), is also concerned about the impact that higher US tariffs may have on the UK chemical sector. In 2023, 23.6% of all UK chemical exports went to the US, according to the UK Office for National Statistics, and the 10% tariff that the US has imposed on most countries could stem that flow.

At the same time, the US has put a 145% tariff on most Chinese goods, and the CIA is wary that the tariff could cause Chinese firms to redirect exports from intended US markets to the UK. The door needs to be shut tight to prevent dumping, CIA CEO Steve Elliott told journalists at an April 10 briefing in London. “But we are still far too open,” he said.

Chemical industry CEOs who had been surveyed by the CIA prior to the introduction of higher US tariffs said then that the future was “uncertain without real sign of recovery.”

Ineos is among the raft of European petrochemical companies that has seen better days. The credit rating agency Moody’s on April 9 downgraded the firm’s core petrochemical subsidiary, Ineos Quattro, to negative from stable after the US tariffs went into effect. Ineos had stated in its recently published 2024 annual report (PDF) that its total indebtedness in 2024 rose 27% to $13.1 billion on sales of $16.8 billion. It posted a net loss of $155 million.

Meanwhile, the oil and chemical company TotalEnergies says it is responding to “considerable overcapacity in the petrochemicals market” by closing the older of its two ethylene crackers in Antwerp, Belgium, by the end of 2027. The closure plan follows the decision by a third party not to renew an agreement to purchase ethylene from the plant. TotalEnergies will continue to run its other Antwerp cracker, which is integrated with the firm’s downstream polymer production units.

Industry analysts expect that a substantial number of chemical plants across Europe will close in the next few years. Companies including BASF, Dow, Eni, and Shell have already made announcements about likely closures.