In recent years, the withdrawal of chemical production capacity by European, Japanese, and South Korean firms has become increasingly common. As China's chemical industry rapidly develops, domestic companies are leveraging cost, scale, R&D, and technological advantages to expand their global presence.

**Europe: Dual Challenges of High Energy Costs and Environmental Pressures** The Russia-Ukraine conflict in 2022 sharply increased natural gas prices, which remain significantly higher than pre-conflict levels (three times U.S. prices in 2025). Rising electricity costs—up 30% YoY in H1 2025—further strain energy-intensive sectors like chemicals. Strict environmental regulations add compliance costs, squeezing profitability. The EU’s chemical capacity utilization rate fell to 74.6% in Q3 2025, well below the long-term average of 81.3%. With unresolved energy structural issues and tightening carbon policies, Europe’s competitiveness is expected to continue declining.

**China: Scale and Cost Advantages Reshape Global Competition** China leads in chemical capital intensity and R&D investment, accounting for 43% and 32% of global spending in 2023, respectively. Its "super factory" model drives economies of scale and deepens supply chain synergies, creating a robust cost moat. Key examples:

1. **MDI**: European producers face energy-cost pressures, while China’s Wanhua dominates with lower raw material, energy, and depreciation costs. Exports of polyurethane products (e.g., pure MDI, TDI) grew at a 3%-23% CAGR from 2017–2024. 2. **Ethylene**: Europe has shut 11 million tons of capacity (10% of total), while China doubled its output to 54.49 million tons (2019–2024), reducing import dependence to 5%. Future expansions may turn China into a net exporter. 3. **PTA**: Overseas players like Ineos and Mitsubishi exit due to outdated, smaller plants, while China’s 200–250k-ton facilities lead in efficiency.

**Outlook**: As outdated capacity exits overseas, China’s integrated leaders—such as Wanhua Chemical, Hengli Petrochemical, and Rongsheng Petrochemical—are poised to strengthen their global positions.

**Risks**: Policy shifts, geopolitical conflicts, weak demand, and competition intensification.