What's Happening?
Europe's petrochemical industry is experiencing a significant decline due to aging infrastructure, high production costs, and increased global competition, particularly from China and the Middle East. Major chemical firms are closing European assets, with Versalis, the petrochemical division of Italy's Eni, posting losses over €3 billion and closing its last steam crackers. Consultancy Wood Mackenzie estimates that up to 40% of the EU's ethylene production capacity is at risk of closure. The industry faces challenges from cheaper feedstock used by competitors, leading to structural dependency on foreign chemical supplies.
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Why It's Important?
The decline of Europe's petrochemical industry poses a threat to various sectors reliant on base chemicals, such as plastics and pharmaceuticals. The potential loss of up to 50,000 jobs highlights the socio-economic impact of the industry's downturn. Europe's dependency on imported chemicals could weaken its industrial sovereignty and competitiveness. The situation calls for urgent political intervention to support domestic production and safeguard strategic industrial sectors. The industry's challenges reflect broader issues of global economic shifts and the need for sustainable industrial strategies.
What's Next?
The European Commission plans to support domestic production of strategic chemicals through expanded state aid and changes to public procurement rules. However, these measures may be insufficient to reverse the current trend. Some member states advocate for a broader 'Critical Chemicals Act' to protect the sector's strategic importance. Industry leaders emphasize the need for decisive action to prevent further decline. The reshaping of the sector may lead to consolidation, with only major companies with sufficient market share and financial resilience likely to survive.
