The European chemical sector is undergoing a significant wave of restructuring, with major companies announcing closures, layoffs, and asset sales. Following Evonik's announcement of significant job cuts and the global shutdown of its polyester business, other industry leaders like INEOS and DOMO Chemical have recently unveiled their own strategic adjustments.
INEOS has announced two major operational changes. On June 17th, its styrenics division, INEOS Styrolution, declared it will permanently close its polystyrene (PS) production site in Channahon, Illinois, USA. The shutdown and decommissioning process is scheduled for completion by Q4 2026. This facility, operational since 1960 with an annual capacity of around 400 kilotonnes, currently employs about 100 people. The company's Americas Regional Development Center (RDC) will remain at the site to continue supporting innovation and market development. As part of a strategy to optimize its asset base, INEOS Styrolution will consolidate its North American PS production from three sites to two, continuing operations at its plants in Decatur, Alabama, and Altamira, Mexico. CEO Steve Harrington cited persistent margin pressures, industry overcapacity, and a comprehensive review of market conditions as reasons for the closure, stating continued operation was no longer economically viable.
In a separate move, INEOS Phenol has informed employees that the planned restart of its Doel phenol plant, originally slated for late 2027, has been postponed. The company had previously announced a potential restart last June, but ongoing volatility in European and global supply and demand, alongside insufficient market recovery, has forced the delay. Consequently, INEOS Phenol's other operational site in Gladbeck, Germany, will continue production beyond 2027. The company had previously announced in June 2025 the permanent cessation of phenol and acetone production at the Gladbeck site. Notably, INEOS has already divested two business units this year: its ultra-pure sulfur dioxide business to Ecovyst and its Italian chlor-alkali business to Esseco Industrial.
In another development, the German caprolactam and polyamide producer Leuna-Polyamid GmbH has initiated insolvency proceedings less than three months after being acquired from DOMO Chemical. This follows the insolvency applications filed in December 2025 by three of DOMO's German subsidiaries, affecting approximately 585 employees. In early April this year, to preserve the integrity of the Leuna site, chemical park operator InfraLeuna and epoxy resin producer Leuna-Harze acquired the Leuna plant from DOMO, operating it as Leuna-Polyamid GmbH. The new company, however, faced liquidity issues due to a deteriorating economic climate and soaring raw material prices. The company's managing director cited price increases of 60% to 100% for key inputs like sulfur, benzene, and propylene, alongside supply difficulties, as primary challenges. While the plant was profitable in April and May, it lacked sufficient financial reserves to withstand the price shock. Existing orders will be fulfilled, but new orders will be reviewed during the insolvency process.
This year has seen a wave of major adjustments across the global chemical industry, including mergers like Huntsman and Olin, layoffs and shutdowns by giants like BASF, Dow, Wacker, and Evonik, and European asset sales by LyondellBasell and SABIC. In May, US specialty materials supplier Trinseo and UK chemical recycler Plastic Energy also announced bankruptcy restructuring.
The Outlook for European Chemicals Remains Dim
A recent quarterly trends report from the European Chemical Industry Council (Cefic) paints a bleak picture. The EU's chemical capacity utilization rate remains at a historically low level of approximately 74% for Q1 2026, significantly below its long-term average of 81.3% and also below the overall EU manufacturing average. Chemical production fell by 3.2% year-on-year in the first quarter, highlighting the sector's fragility. EU chemical trade was notably weak at the start of 2026, with exports dropping by €4.6 billion (12.4%) and imports falling by an even larger €4.8 billion (15.7%), reflecting weak external demand and shrinking domestic industrial activity.
In 2025, European chemical production declined by 2.4%, remaining 11% below the 2014-2019 level. Petrochemicals were hit hardest, with output falling over 10%, while polymer production dropped 6.9%, and basic inorganic chemicals fell 2.7%. Most specialty chemical sub-sectors declined around 2%, with dyes and pigments down 7%. For the first eleven months of 2025, sector sales were down 3.2% year-on-year, with chemical product prices falling 0.5% for the full year. From January to October 2025, chemical exports fell 3.8% year-on-year, with a trade surplus of €31.3 billion, down €7.3 billion from the same period in 2024. Specialty chemicals were the largest export category, while petrochemicals were the largest import category, resulting in the largest trade deficit.
The report concludes that, despite slight improvement early in 2026, the EU chemical industry faces persistent challenges: weak demand, declining output, and intense global competition. Growing global trade risks, including US measures and geopolitical tensions affecting key shipping lanes like the Strait of Hormuz, add further uncertainty. Overall, the EU's chemical sector is in a fragile phase of development rather than recovery. The outlook remains dim unless energy prices fall sustainably, demand strengthens, and the global trade environment becomes more stable. The risk of a continued contraction of Europe's chemical production base in the medium term remains significant.