Investment Plummets for Europe's Chemical Industry

Written by Martin Lynch, European News Editor for IIR News Intelligence (Sugar Land, Texas)

Summary

The European chemical industry is shrinking due to record plant closures, a collapse in investment and high energy prices. 

Investment Plummets

Investment in Europe's chemical industry collapsed by 86% in the past year as the sector also experienced record plant closures. New investment has slowed dramatically as annual announced investment capacity fell from 2.7 million tonnes (Mt) in 2022 to just 0.3 Mt yin 2025 for a total of just 7 Mt over 2022-2025. According to the European Chemical Industry Council (Cefic), the drop reflected a shift from broad investment across multiple innovation pathways, including electrification, hydrogen feedstocks and circular plastics, "to barely one pilot initiative." At the same time, chemical plant closures reached a record high of 37 Mt of capacity - or around 9% of European production capacity - and resulted in the loss of 20,000 direct jobs in the chemical industry. Closures have surged sixfold since 2022. The hardest hit chemical industry nations were Germany (25%), the Netherlands (20%), the U.K. (12%), France (10%), Italy (7%), Belgium (6%) and Spain (4%).

Why the Slump?

Lack of energy cost-competitiveness was the dominant reason for closures in almost half (49%) of the cases, followed by low demand (19%), overcapacity (9%) and regulations (8%). 

Close to Breaking

Marco Mensink, Cefic's director general said: "It's no longer a question of being five minutes before or after twelve. The sector is under severe stress and breaking. The rate of closures has doubled in a year, and even worse, annual investments are half and close to zero. On both sides, the speed is accelerating, not slowing. We need decisive action this year, with impact at factory-floor level."

Investment Collapse

Cefic noted that confirmed investment capital expenditure (CAPEX) has decreased by a factor of five from 7.6 billion euro (US$9 billion) in 2022 to 1.5 billion euro (US$1.8 billion) in 2025. Investment levels in Germany lagged behind France and the Netherlands despite it having Europe's largest chemical industry. Between 2022 and 2025 the majority of investment has been in petrochemicals with 3.8 Mt (58%), which Cefic said "only partially offsets the 17.8 Mt of closures." Most of the largest confirmed capacity investments are in Belgium (2.4 Mt, 36%), Germany (0.8 Mt, 12%), and France (0.4 Mt, 6%), accounting for more than half of the total. Investment themes included projects related to the battery value chain (14%), emissions reduction (14%) and recycling (11%) although these themes follow the overall decreasing trend in investment. 

Plant Closures

Between 2022 and 2025, announced closures in the European chemical industry increased sixfold from 2.9 Mt to 17.2 Mt per year, and doubled in 2024-25, bringing the total to 37 Mt - 9% of capacity. Most of the closures have been made mainly within upstream petrochemicals (17.8 Mt, 48%), followed by basic inorganics (11.7 Mt, 32%), polymers (5.4 Mt, 15%), and specialty chemicals (2 Mt, 5%). Within petrochemicals, almost 50% of the total announced capacity closures concern nine steam crackers, which corresponds to a 16% net reduction in European steam-cracking capacity, all located in integrated chemical clusters, putting these clusters under increasing pressure.

Most of the closures occurred in Germany (8.8 Mt, 25%), the Netherlands (7.2 Mt, 20%), U.K. (4.5 Mt, 12%), France (3.9 Mt, 10%), Italy (2.5 Mt, 7%), Belgium (2.3 Mt, 6%), Spain (1.6 Mt, 4%) and the rest of Europe (6.0 Mt, 16%). "With closures now significantly outpacing new investments, the European chemical industry is contracting," Cefic concluded. "This trend points to deepening uncertainty for the sector and raises serious questions about Europe's ability to maintain a competitive, resilient industrial base."

Key Takeaways 

• Investment in Europe's chemical industry collapsed by 86% in the past year.
• Since 2022, just 7 million tonnes (Mt) of new plant capacity has been added while capacity closures have hit a record high of 37 Mt.
• High energy prices was the main reason for almost half of all closures, followed by low demand (19%), overcapacity (9%) and regulations (8%). 

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