The European Chemical Industry Faces Extinction! Mass Shutdowns as the Industry Fights for Survival!

INEOS: The European Chemical Industry Faces Extinction!

On February 26, INEOS Chairman and CEO Jim Ratcliffe issued an open letter to all European politicians.

The letter emphasized that over the past century, the European chemical industry has been crucial to the success of the European economy, generating approximately one trillion euros in revenue—on par with the automotive industry. However, the European chemical industry is now facing extinction. The primary reasons for this crisis are government policies that have led to soaring energy prices and excessive carbon costs.

The letter further pointed out that the European petrochemical industry is at a massive disadvantage and is falling into crisis. Government policies will result in the closure of all petrochemical companies in Europe. Major competitors are planning to exit Europe due to the government's failure to take effective action. The consequence of these policies will be that Europe will have to import all its raw materials from the U.S. and China, dealing a severe blow to the European economy.

Mass Shutdowns! Major Corporations Announce Closures in 2025

Jim Ratcliffe’s warnings are not unfounded. Since the beginning of 2025, several chemical companies have announced production cuts and shutdown measures in the European market. Some of the key developments are as follows:

Such a dense wave of shutdowns is rare, especially considering that these companies are all well-known multinational corporations in the chemical industry. What are the deeper reasons behind these closures?

Mismatch Between Business Positioning and Market Demand

Take Zeon Corporation as an example. It was initially positioned as a key supplier of battery materials, such as lithium battery adhesives, with an investment plan aimed at expanding its market share in the U.S. However, the global battery materials market is highly competitive, with rapid technological advancements and rival companies continuously introducing more cost-effective and high-performance products.

Market Competition and Cost Pressures

Technological progress and capacity expansion in developing countries like China have put immense pressure on international chemical giants. Companies from these regions leverage cost advantages and continuously improving technology to seize market share. This makes it difficult for other firms to control costs and expand their markets, ultimately affecting the profitability of related production lines.

Economic Stagnation and Profit Contraction

The current global economic stagnation and weak consumer demand directly impact the sales volume and pricing of chemical products, squeezing corporate profit margins.

Can Higher Tariffs Save Europe's Chemical Industry?

Regarding solutions to the crisis facing the European petrochemical sector, Ratcliffe proposed his own recommendations. He argued that deindustrialization as a means to reduce Europe's carbon emissions is foolish. Instead, he suggested eliminating carbon taxes, providing competitive energy for industries, and encouraging the growth of the petrochemical sector alongside the development of clean technologies. Additionally, he called for Europe to establish tariff barriers to protect domestic industries.

Ratcliffe’s open letter sparked strong reactions among European politicians. Many expressed concern over the challenges facing the European chemical industry and stated that they would seriously consider his suggestions. Some European governments have already begun formulating policies to mitigate the impact of high energy prices and carbon taxes on the chemical sector.

However, not everyone agrees with Ratcliffe's proposals. Critics argue that abolishing carbon taxes and imposing trade barriers could contradict Europe's green transition policies and principles of free trade. They urge governments to adopt more comprehensive and balanced measures to address the issues facing the chemical industry.

Historical experience and economic principles clearly show that trade wars and tariff battles have no real winners. Blindly raising tariffs will, in the long run, impose heavy costs on European businesses and consumers. Chemical products serve as fundamental raw materials across various industries, and tariff-induced price hikes will ripple through downstream sectors, increasing manufacturing costs across Europe, reducing European products' global competitiveness, and ultimately harming the overall European economy.