At least 40% of the European Union’s ethylene production capacity, equivalent to around 9.8 million metric tonnes per year out of a total of 24.5 Mtpa, is now at high to medium risk of closure according to a Wood Mackenzie analysis reviewing facilities at or below 80% utilisation rates, many of which are small to mid-sized and increasingly unviable amid soaring energy and compliance costs.
Prolonged exposure to high production costs, including elevated natural gas and naphtha prices, combined with strict CO₂ regulation, has eroded margins across the EU petrochemical sector. For example, Italy’s Versalis has posted over €3 billion in losses over five years and is now retiring its last two steam crackers in favor of lower-carbon investments like bio-refineries and recycling projects. Major multinationals including Dow, ExxonMobil, Shell, TotalEnergies, and SABIC are also reviewing or shuttering European chemical assets in response to continued losses.
The region’s significant cost disadvantage stems from reliance on naphtha feedstock, priced at around €748 per tonne of ethylene produced, compared to producers in the U.S. (approx. €370/t using ethane) and the Middle East (approx. €185/t). The average age of EU steam crackers, over 40 years versus 11 in China—is amplifying inefficiency, making modernization prohibitively expensive.
This industrial fragility is deepening Europe’s net import dependence for essential feedstocks like ethylene and propylene, forcing chemical buyers to increasingly source from lower-cost regions such as China and the Middle East.
With global competition intensifying, China adding approximately 6.5% more ethylene capacity annually until 2030 (reaching ~87 Mtpa), and North America targeting ~58 Mtpa, Europe’s shrinking share in global capacity is becoming increasingly evident to avert further decline, EU policymakers from France, Italy, and Spain are calling for a “Critical Chemicals Act” to underpin strategic facility investments. Meanwhile, the European Commission is preparing expanded state aid, preferential public procurement for domestic output, and enhanced industrial sovereignty policies.
The outlook is stark: without rapid policy action or investment in modernization, Europe’s petrochemical foundations risk irreversible erosion, capping its influence in a global market increasingly dominated by low‑cost and high-capacity producers.
