Seven Olefin Units Permanently Shut Down! Europe’s Olefin Production Capacity Closure Trend Continues

Crackers in continental Europe are shutting down at an unprecedented rate.Within seven years, more than one-seventh of ethylene production capacity has disappeared, and energy costs along with market imbalances are forcing industry giants to reassess the future.

Over the past year and a half, the European petrochemical industry has experienced an unprecedented wave of olefin capacity cuts. Facing a prolonged industry downturn and pessimistic short-term outlook,Major petrochemical producers in Europe have permanently closed or plan to shut down seven steam crackers.。

These shutdown measures have significantly altered the regional supply pattern. According to data from S&P Global Commodity Insights, these seven cracking unitsThe total ethylene production capacity is approximately 4.5 million tons per year, with a propylene production capacity of 2.3 million tons per year and a butadiene production capacity of 430,000 tons per year.

01 Capacity Plummets: Number of Olefin Plants in Europe Drops Sharply

As the planned shutdown measures are gradually implemented, the number of existing ethylene plants in Europe is expected to fall below the 50 mark. Data from S&P Global indicates that the number of ethylene plants in Europe will decrease to 48 by 2026 and further reduce to 46 by 2029.

Compared to the 60 ethylene plants with a total designed capacity of over 26 million tons per year 15 years ago, the forecasted capacity for 2029 is only slightly above 22 million tons per year.

Capacity reductions are not limited to ethylene. A research report by the European Chemical Industry Council (Cefic) states that Europe closed approximately 11 million tons per year of chemical capacity during 2023 to 2024, with olefin capacity accounting for as much as 26% (approximately 2.86 million tons of ethylene and propylene capacity).

02 Actions of Giants: Shutdown Plans of Major Manufacturers

According to information released by major corporations, Europe will continue to shut down cracking units on a large scale. Shell and Saudi Basic Industries Corporation (SABIC) have both stated that they will reevaluate and optimize their asset portfolios in Europe, which include four cracking units in the Netherlands, Germany, and the United Kingdom, with a total ethylene capacity of 2.6 million tons per year.

BP is seeking buyers for its integrated refining and petrochemical assets in Gelsenkirchen, Germany. Dow has announced the permanent closure of its 510,000-ton-per-year mixed-feed cracker in Böhlen, Germany, by the fourth quarter of 2027, and idled its LCH3 unit in Terneuzen, Netherlands, in June for economic reasons.

TotalEnergies plans to shut down its 550,000-tonne-per-year NC2 cracker in Antwerp by the end of 2027 to address the market supply and demand imbalance. Since 2024, ExxonMobil and SABIC have respectively closed their naphtha cracking units at petrochemical plants in Gravenchon, France, and Geleen, Netherlands, reducing the European market's ethylene and propylene capacity by approximately 1.1 million tonnes annually.

The Root of the Dilemma: The Dual Pressure of High Costs and Weak Demand

Shutting down the cracking unit on such a large scale stems from the deep-seated difficulties faced by the European petrochemical industry. Shell CEO Wael Sawan candidly mentioned that Shell is intensifying the evaluation of its persistently loss-making global chemical assets in order to "stop the bleeding and cut the losses."

The European petrochemical industry is facing structural challenges rather than simple business cycle issues. According to data from S&P Global, the current operating rate of European crackers is about 75%, and a further reduction of approximately 2 million tons per year of ethylene capacity is needed to bring the operating rate back to a normal level of 90%.

The cost difference is staggering. According to a report by Eni Group, the cost of producing ethylene from naphtha in Europe is $800 per ton, which is significantly higher than the $400 per ton for the U.S. ethane route and $200 per ton for the Middle East ethane feedstock route.

Strategy Shift: From Basic Chemicals to Specialty Chemicals

Faced with structural challenges, European chemical companies are repositioning their strategic focus. Many companies are shifting their attention to specialty chemicals or other higher-value businesses.

Over the past five years, Versalis, the chemical division of Italy's Eni Group, has accumulated losses exceeding 3 billion euros. After shutting down two cracking units in Italy, the company is shifting its focus to investing 2 billion euros in the development of biorefineries and chemical recycling businesses.

Covestro CEO Markus Steilemann noted: "Chemical investments with high energy consumption and high dependence on raw materials have become unsustainable in Europe. Specialty chemicals are the direction for the future." He added that high energy-consuming chemical products account for only about 10% of the German chemical industry, with most of this capacity having already exited or entered a state of long-term shutdown.

05 Future Outlook: Capacity Integration and Market Rebalancing

According to industry insiders, by reducing ethylene capacity by 4.5 million tons per year, the operating rate of European crackers is expected to recover to around 85% by 2030, thereby driving the olefin market towards balance.

However, the commissioning of the new INEOS Antwerp facility will offset some of the shutdown capacity. INEOS is investing 4 billion euros to construct Europe's first new cracker in 30 years in Antwerp, using ethane as a feedstock. The facility is designed with an ethylene production capacity of 1.45 million tons per year and is planned to be operational in 2026.

S&P Global predicts that global ethylene prices will fully recover by 2028, as demand growth for ethylene will eventually surpass the increase in capacity. However, unless the European ethylene market consolidates immediately to reverse the long-standing issue of overcapacity, it will fall into a prolonged downturn.

The future landscape of the European petrochemical industry is being reshaped. Behind the wave of capacity closures is a reordering of global competitiveness.The cost of the ethane route in the United States is only $400/ton, as low as $200/ton in the Middle East, while the cost of producing ethylene from naphtha in Europe is as high as $800/ton.

Ineos Antwerp's new cracker plant is planned to be operational in 2026. It will become the largest olefin plant in Europe, with carbon emissions three times lower than the European average.This 4 billion euro investment facility is just a fragment of the future direction of the European petrochemical industry.

The European market may usher in an era of oligopolistic competition. The survivors will be those companies that can transition to lower-cost and more sustainable operations, redefining Europe's position in the global petrochemical value chain.