Another global giant announces it may shut down all chemical departments in Europe.

The European chemical industry is facing unprecedented challenges. This year, many companies, including BASF, INEOS, Teijin, AkzoNobel, and SGL, have announced the closure and adjustment of their chemical operations in Europe. The chairman of INEOS even published an open letter to all European politicians, stating that the chemical industry in Europe is facing extinction, primarily due to unfavorable factors such as soaring energy prices and high carbon costs.

 

Just a few days ago, on March 18, LyondellBasell announced that it is considering selling certain olefins and polyolefins assets in Europe, and in conjunction with Covestro, has decided to permanently close the propylene oxide/styrene monomer (PO/SM) production facility (PO11) at the Maasvlakte plant in the Netherlands. As a result, domestic companies related to propylene oxide, such as Hongbaoli, Yida Co., Hanjin Technology, Jiangtian Chemical, and Binhai Chemical, saw a surge in the secondary market.

Now another world giant has announced its withdrawal.

 

【DT New Materials】has learned from CCTV reports that on March 25, Shell presented to investors its plans for enhancing profitability in the coming years, which includes a renewed review of its chemical departments in the U.S. and the Netherlands.

In the United States, Shell hopes to explore establishing strategic partnerships. However, in Europe, Shell has indicated that this may lead to partial or even complete shutdowns of these chemical sectors. The reasons remain high energy costs, carbon emissions, and network costs.

 

It is understood that currently in Europe, Shell operates large chemical complexes in Rheinland, Germany, Moerdijk, Netherlands, and Mossmoran, UK, producing mainly ethylene, propylene, styrene, ethylene oxide, basic chemicals, polymers, and fuels. In 2024, Shell's chemical division reported a loss of $392 million, continuing a trend of losses over the past three years. In the fourth quarter, the adjusted profit was $3.66 billion, a year-on-year decrease of 50%.

 

In addition, Shell announced that it will cut annual expenditure to between $20 billion and $22 billion by 2028, and plans to increase its structural cost reduction target from $2 billion to $3 billion by the end of this year to a cumulative total of $5 billion to $7 billion by the end of 2028 (based on the 2022 plan). The company also plans to allocate 10% of its capital expenditure to low-carbon businesses by 2030, with the aim of becoming a leading global integrated gas and LNG company, creating an integrated energy trading platform centered around customers, while maintaining substantial oil production.

 

However, in China, Shell has continued to increase its investment. In addition to the Changbei natural gas development project, supplying liquefied natural gas, participating in carbon emissions trading (through Shell Energy (China) Co., Ltd. (SEC)), and engaging in renewable energy and energy solutions businesses, it is also involved in the four downstream product businesses of lubricants, gas stations, asphalt, and chemicals.

In the chemical industry, in 2000, Shell Nanhai Limited and China National Offshore Oil Corporation (each holding a 50% stake) jointly established CNOOC Shell Petrochemicals Company Limited in the Daya Bay Petrochemical Park in Huizhou, Guangdong. The investment project includes Phase I (commissioned in 2006) and Phase II (commissioned in 2018), with a total annual ethylene production capacity of 2.2 million tons and an annual production of 6 million tons of chemical products, including basic raw materials such as ethylene, propylene, styrene monomer, and ethylene glycol, as well as high value-added products such as polycarbonate and carbonate solvents.

 

On January 15, 2025, CNOOC and Shell decided to initiate Phase III of the project, adding a 1.6 million tons/year ethylene cracking unit and downstream derivative units (such as linear alpha olefins for producing detergent alcohols and synthetic lubricating oil base oils), polycarbonate, and carbonate solvents, with an expected completion date in 2028.

 

Recently, the company held the commissioning ceremony for its 240,000 tons/year bisphenol A unit, 220,000 tons/year diphenyl carbonate unit, and 260,000 tons/year polycarbonate unit.

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