The global petrochemical industry is currently undergoing a significant strategic overhaul, characterized by a wave of asset closures, divestments, and comprehensive portfolio reassessments. This extensive restructuring is primarily propelled by two powerful forces: the dramatic expansion of chemical production capacity in China and the escalating operational expenditures across Europe, both fundamentally reshaping the worldwide competitive landscape.
- LyondellBasell has initiated exclusive discussions for the divestment of four European olefin and polyolefin plants.
- Dow Inc. announced the closure of three European upstream facilities, including an ethylene cracker in Germany.
- ExxonMobil plans to cease chemical production and shut down its Gravenchon, France, steam cracker after accumulating over €500 million ($582.75 million) in losses since 2018.
- Shell completed the sale of its Singapore energy and chemicals park and is undertaking a strategic review of its global chemical business.
- TotalEnergies intends to decommission its oldest steam cracker in Antwerp, Belgium, by the end of 2027.
- Italian energy company Eni is finalizing the closure of its last two steam crackers in Italy by year-end.
Global Pressures and Evolving Regional Dynamics
Europe, in particular, is disproportionately affected by this rationalization. The region faces significantly higher energy expenses and increasingly stringent regulatory burdens, which collectively diminish its global competitiveness in petrochemical production. This is evident in the widening gap between European and global energy prices, impacting profitability and making operations less viable. In stark contrast, the United States and the Middle East largely maintain their resilience. Both regions benefit from advantageous feedstock costs, particularly abundant natural gas and ethane, alongside well-established, integrated value chains that provide a crucial competitive edge. Concurrently, Asian petrochemical manufacturers are also adjusting their capacities, albeit at a more measured pace compared to their European counterparts, reflecting different market dynamics and growth trajectories within the continent.
Major Players Reshaping Global Footprints
A number of the industry’s leading participants are actively restructuring their operational presence to adapt to these new market realities:
LyondellBasell, a global leader in plastics, chemicals, and refining, announced in June the commencement of exclusive negotiations to divest four of its European olefin and polyolefin plants. These facilities, located in France, Germany, Britain, and Spain, are slated for potential acquisition by Munich-based investment firm AEQUITA. This strategic move is complemented by the company’s ongoing evaluation of strategic options for its additional facilities situated in the Netherlands and Italy, signaling a broader portfolio optimization effort across its European operations.
Similarly, Dow Inc., one of the world’s largest chemical producers, made a significant announcement in early July regarding the closure of three key European upstream facilities. This includes an ethylene cracker in Böhlen, Germany; chlor-alkali and vinyl assets in Schkopau, Germany; and its siloxanes plant in Barry, Britain. These recent closures follow a prior decision in January to idle another cracker in the Netherlands, underscoring a consistent trend of rightsizing its European asset base.
ExxonMobil, a major integrated energy and chemical company, indicated last year its definitive intent to cease chemical production and shut down its steam cracker at Gravenchon, France. This decisive action was precipitated by the site’s accumulated losses, exceeding 500 million euros ($582.75 million) since 2018, and its persistent inability to compete effectively within the market. This highlights the severe profitability challenges faced by certain European assets.
Shell, the British multinational oil and gas giant, completed a notable transaction in April with the sale of its energy and chemicals park in Singapore. Concurrently, Shell is undertaking a comprehensive review of its global chemical business, encompassing its substantial operations in both Europe and the United States. Reports from the Wall Street Journal in March indicated that the company had engaged Morgan Stanley to conduct this strategic review, suggesting a potential broader re-evaluation of its chemical portfolio.
Meanwhile, BP, another prominent energy company, is actively pursuing buyers for its Ruhr Oel refinery, cracker, and downstream assets located in Gelsenkirchen, Germany. This divestment initiative, first announced in February, aligns with the broader industry trend of consolidating and optimizing asset portfolios, particularly in regions facing structural cost disadvantages.
In April, French energy major TotalEnergies declared its intention to decommission its oldest steam cracker in Antwerp, Belgium, by the end of 2027. The company explicitly attributed this decision to an anticipated “significant surplus of ethylene” in the European market, pointing to an oversupply scenario that is rendering older, less efficient crackers uneconomical.
Finally, Italian energy company Eni is poised to finalize the closure of its last two steam crackers in Italy, specifically located in Brindisi and Priolo, by year-end. This follows their prior closure of a polyethylene plant in Ragusa, Sicily, marking a strategic withdrawal from certain petrochemical production segments within the country.
This widespread strategic realignment, extensively reported by Reuters, underscores a fundamental and profound shift within the global petrochemical sector. Companies are rigorously adapting their operations to new geopolitical and economic realities, with a clear strategic emphasis on enhancing operational efficiency and bolstering profitability within an increasingly challenging and competitive market environment.
David Thompson earned his MBA from the Wharton School and spent five years managing multi-million-dollar portfolios at a leading asset management firm. He now applies that hands-on investment expertise to his writing, offering practical strategies on portfolio diversification, risk management, and long-term wealth building.