European Chemical Industry Contracts Sharply Amid Soaring Closures and Plummeting Investment

European chemical plant closures have surged sixfold since 2022, leading to 37 Mt of lost capacity and the elimination of 20,000 direct jobs, with an additional 89,000 indirect jobs at risk. Energy cost competitiveness is the primary reason, alongside low demand and regulations. Simultaneously, new investment has fallen dramatically from 2.7 Mt in 2022 to 0.3 Mt in 2025. This contraction raises serious concerns about Europe’s industrial competitiveness and resilience.

The European chemical industry is experiencing a severe contraction, marked by a sixfold increase in plant closures since 2022. This alarming trend has resulted in a substantial loss of 37 megatons (Mt) in production capacity, representing approximately 9% of the continent’s total output, and has directly eliminated 20,000 jobs within the sector. Furthermore, an estimated 89,000 indirect jobs across Europe are now at risk, underscoring the chemical industry's critical role in regional value chains.The petrochemical segment is particularly hit, accounting for 48% of announced capacity closures, with half of this attributed to the shutdown of nine steam crackers. Geographically, Germany (25%) and the Netherlands (20%) bear the brunt, making up nearly 45% of the capacity slated for closure. The main driver for these closures is a lack of energy cost competitiveness, complemented by factors like low demand (19%), overcapacity (9%), and increasing regulations (8%).Compounding this issue, new investment has dramatically slowed. Annual announced investment capacity plummeted from 2.7 Mt in 2022 to a mere 0.3 Mt year-to-date in 2025, totaling only 7 Mt over the entire 2022–2025 period. This decline reflects a significant shift from broad investments in innovative pathways such as electrification and circular plastics to very limited pilot initiatives. With closures now far outpacing new investments, the industry's contraction poses critical questions about Europe’s capacity to maintain a competitive and resilient industrial foundation.