The global petrochemical industry is experiencing a sweeping transformation as companies respond to overcapacity driven by China’s massive build-out, coupled with escalating operational costs in Europe. This realignment is manifesting in a wave of closures, asset sales, and strategic portfolio reviews, with Europe bearing the brunt of the rationalisation while the U.S. and Middle East remain relatively insulated.
Europe: Ground Zero for Consolidation
European producers are being forced to rethink operations amid uncompetitive cost structures and oversupply, particularly in key products like ethylene and polyethylene. The response has been swift and severe:
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LyondellBasell (U.S.) announced in June that it is in exclusive negotiations to sell four of its European plants—in France, Germany, the UK, and Spain—to AEQUITA, a Munich-based investment firm. It is also evaluating its sites in the Netherlands and Italy.
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Dow Inc has been particularly aggressive, declaring in July that it will shut three upstream sites in Europe, including:
- An ethylene cracker in Böhlen, Germany;
- Chlor-alkali and vinyl operations in Schkopau, Germany;
- A siloxane facility in Barry, UK. Additionally, Dow idled a cracker in the Netherlands earlier this year.
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ExxonMobil confirmed last year it will shut down chemical production and a steam cracker at Gravenchon, France, citing losses exceeding €500 million since 2018.
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TotalEnergies will shutter its oldest steam cracker in Antwerp, Belgium by end-2027, citing oversupply of ethylene in Europe.
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BP is actively seeking buyers for its Ruhr Oel refinery and downstream assets in Gelsenkirchen, Germany.
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Eni, Italy’s energy giant, is completing the shutdown of its last two steam crackers in Brindisi and Priolo, and has already closed a polyethylene plant in Ragusa.
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Huntsman Corp (U.S.) is closing its Deggendorf polyurethanes plant in Germany and will shut another site in Moers by the end of the current quarter.
Asia: Strategic Retrenchment
While not as hard-hit as Europe, petrochemical producers in Asia are also taking precautionary steps in the face of falling margins and demand shifts:
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Japan’s ENEOS plans to partially halt ethylene production at its Kawasaki refinery by end-2027. It also intends to wind down lubricant and some petroleum product operations at its Yokohama plant by March 2028, while exploring relocation options.
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Poland’s Orlen announced in late 2024 that it would scale back and delay its major olefins project, with operations now pushed back to 2030 and project costs cut by up to one-third.
Middle East and U.S.: Strategic Positioning, Not Retrenchment
The U.S. and Middle Eastern players are largely avoiding severe cutbacks, benefiting from cheaper feedstock and better integration:
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Shell, though based in the UK, sold its Singapore energy and chemicals park in April—home to a refinery, ethylene cracker, and petrochemical units—as part of a global restructuring. A strategic review of its chemical business in Europe and the U.S. is underway, with Morgan Stanley leading the evaluation.
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SABIC (Saudi Arabia) announced the closure of one of its two naphtha crackers in Geleen, the Netherlands, in response to lower European competitiveness.
What This Means for the Sector
The ongoing realignment is set to reshape the global petrochemical landscape:
- Europe is retreating from the upstream and bulk commodity segments, particularly ethylene and polyolefins.
- Asia, especially China, continues to dominate global capacity, though market saturation is leading to rationalisation elsewhere in the region.
- The U.S. and Middle East maintain their advantage due to access to low-cost feedstock, strategic market access, and integrated value chains.
Industry analysts expect further consolidation as companies continue to optimize portfolios, cut costs, and pivot toward specialty chemicals and circular economy solutions, especially in the face of tightening environmental regulations and shifting global demand patterns.