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It is hard to imagine Europe without a chemicals industry. Inconceivable, in fact, that a shared history spanning two centuries of discovery, invention, and industrialisation could actually come to an end. Whereas the romantic historian might at this stage reference Alfred Nobel or Marie Curie, two of chemistry’s great pioneers, the industrial historian is more likely to point to Fritz Haber and Carl Bosch, chemists who epitomised an era when the science of chemistry evolved into a true chemicals industry.
The modern historian, however, may simply point to the numbers: the estimated 1.2 million people who are currently employed in the European Union (EU) within the chemicals industry, as well as a further 3 million in related (and partly dependent) sectors. In 2025, this industry generated approximately Euro 635 billion of turnover within Europe, supported on the shoulders of over 30.000 European companies. Inconceivable, indeed, to imagine its demise.
However, that is exactly the stark picture painted by a recent Cefic report. The market downturn is broad and persistent, with little sign of near‑term improvement. It has led Europe’s share of the global chemical market to drop to 13%, with market leader China dominating with 46% of global sales. And now Europe faces a pronounced capacity contraction, with about 11 million tonnes of chemical production set to close across 21 major sites.
The European Problem
The planned closures are concentrated in aromatics, accounting for 41% of capacity taken offline in 2023–24, including isopropylbenzene, styrene, ethylbenzene, and toluene diisocyanate. Olefins and polymers represent a further 26% and 23%, respectively. The envisaged cracker shutdowns are especially damaging, nearly 3 million tonnes of naphtha‑cracker capacity—around 5% of Europe’s base—will close, severing a key link between refining and petrochemicals.
Cefic warns that the oversupply is global and structural. New capacity elsewhere, weak European demand, and utilisation falling to about 75% in 2023 (projected to stay at 74–76% through 2028) all undermine European industry development and complicate efforts at decarbonisation. Even core building blocks are affected—ethylene, propylene, ammonia, chlor‑alkali—all continue to be hit hard by high energy costs whilst suffering sluggish demand in Europe.
Downstream, closures are already tightening supply of the resins, solvents, and intermediates used in coatings, forcing formulators to re‑qualify materials, secure alternatives, and accelerate substitution and recycling.
The brutal reality is that the competitiveness gap—high energy and carbon costs, weak demand, and overcapacity—makes closures systemic rather than cyclical. Stricter emissions rules, slow permitting, and feedstock growth outside Europe further raise costs and shift production to lower‑cost regions, leaving European legacy assets exposed. This creates a self‑reinforcing cycle: margin compression leads firms to defer maintenance and capex, reducing reliability and making closures more likely. Each upstream shutdown raises supply risk for downstream resin, solvent, and additive makers, resulting in sustained volatility and rationalisation across coatings and related sectors.
This precarious situation prompted Sir Jim Ratcliffe, CEO of INEOS, to recently describe the European chemical industry as being at a “tipping point” and to call upon Europe’s politicians to make an “eleventh-hour intervention” to save it.
Ramifications for Coatings
The recent upstream closures in Europe (see Table 1) have impacted greatly on several coatings value chains, driving companies within that space to both react to the changes and rethink their strategies.
| Company | Site | Units closed / curtailed | Downstream coating segments affected | Timing |
| Solvay | Salindres (France) | TFA & fluorinated derivatives | Fluoropolymer & specialty additive coatings | Announced Sep 2024; stop Oct 2025 |
| Westlake | Pernis (Rotterdam, NL) | BPA, liquid epoxy resin; ECH/allyl chloride mothballed | Epoxy coatings; marine & industrial primers | Announced Jun 2025; closure 2025 |
| BASF | Ludwigshafen (Germany) | Adipic acid; cyclododecanone; cyclopentanone | Polyester polyols for PU topcoats; UV‑stabilisers | Announced Aug 2024; shutdowns 2025 |
| LyondellBasell/ Covestro | Maasvlakte (PO11, NL) | PO11 POSM unit (propylene‑oxide / styrene monomer) | PU binders; polyol feedstocks; styrenic binders | Announced Mar 2025; phased to 2026 |
| INEOS | Rheinberg (Germany) | Epichlorohydrin; chlorine / caustic units | Epoxy precursors; chlorinated intermediates | Announced 2025; phased timing |
| Dow | Böhlen, Schkopau, Barry (EU) | Ethylene cracker; chlor‑alkali/vinyl; siloxanes | Alkyd modifiers; styrenic binders; chlorinated intermediates | Announced Jul 2025; shutdowns 2026–27 |
| Borealis | Schwechat (Austria) & others | Mechanical recycling projects suspended | Recycled polyolefin modifiers; circular feedstock | Paused Jul 2025 |
| Evonik | Hanau (Germany) & others | Keto‑acid production discontinued | Niche additives; crosslinker intermediates | Announced Oct 2024; end‑2025 |
| Shell | Various EU assets | Strategic review; selective closures possible | Base monomers & solvents for PU, epoxy, styrenics | Announced Mar 2025; under review |
Formulators and R&D teams must accelerate parallel trials, ageing studies, and pilot runs to validate substitutions, while production and operations contend with tighter feedstock windows, partial shipments, and the need for short and validated recipes, as well as rapid changeovers. Procurement and supply chain groups face longer lead times, freight risk, and single‑source exposure, requiring risk‑mapping of inputs, supplier pre‑qualification, and tighter contractual clauses. Distributors and traders are forced into allocation management and higher inventory costs, while QA and regulatory teams manage greater material variance and heavier documentation through stricter impurity profiling and expanded pilot capacity. Sales and specification teams must navigate pricing complexity and performance trade‑offs with dual‑spec options and proactive customer management, while sustainability groups re‑baseline recycled‑content targets and qualify multiple recyclers. SMEs remain the most exposed, with limited purchasing power and R&D budgets, making pooled procurement, SKU prioritisation, and short‑term financing critical mitigations.
Against this backdrop, immediate near-term priorities are clear. Companies should risk‑map their top 20 inputs by spend and technical criticality, run parallel requalification streams for two to three substitutes per critical input with supplier co‑validation, and secure flexible supply arrangements such as conditional offtake, tolling, or regional blending. Selective safety stock of 30–90 days should be funded only for the highest‑risk SKUs, while reclaim and conversion projects—such as solvent recovery, powder reclaim, and waterborne or low‑temperature conversions—should be scoped to reduce upstream exposure and support decarbonisation goals. These measures demand capital and operational discipline, but they are essential to maintain continuity, protect revenue, and preserve customer trust in a structurally tighter market.
Longer-Term Priorities and Actions
In the wake of widespread upstream closures across Europe’s chemical sector, coatings manufacturers face a structurally tighter supply of resins, solvents, and intermediates. Long‑term priorities must therefore be framed not as abstract ambitions, but as direct responses to the contraction of feedstock and monomer capacity.
Strategic feedstock diversification becomes unavoidable when local crackers and aromatic units shut down, cutting off reliable streams of styrene, propylene oxide, and epoxy precursors. By building multi‑region sourcing networks for resins and solvents, and qualifying recyclers for polyolefin modifiers or bio‑based solvents, coatings producers reduce their dependence on European assets that are disappearing. Diversification is the most immediate hedge against closures.
Technology and R&D investment is the next line of defence. As upstream closures force formulators to source variable resin grades from different regions, coatings must be reformulated to tolerate inconsistency. Accelerated weathering platforms and digital twins allow manufacturers to predict how coatings will perform when inputs shift, reducing the risk of customer rejection. In this way, R&D is not driven by innovation alone, but by the need to cope with volatility created by upstream contraction.
Operational resilience also ties directly to closures. When resin or solvent supply is interrupted by the shutdown of a European cracker or chlor‑alkali unit, modular paint lines and tolling partnerships provide flexibility. Distributed production capacity ensures that coatings can still be manufactured even if one feedstock stream dries up, preventing bottlenecks from cascading downstream.
Policy and advocacy engagement may seem less connected, but closures are often triggered by Europe’s high energy costs and strict permitting. By pushing for competitive energy pricing and pragmatic VOC and emissions rules, coatings manufacturers indirectly address the root causes of upstream contraction. If policy shifts reduce the pace of closures, downstream supply becomes more stable.
Financial risk management is a direct response to the price volatility that follows closures. When epoxy resin or PU polyol supply tightens, freight and solvent costs spike. Hedging, diversified contract structures, and pooled procurement for SMEs help coatings companies absorb the shocks created by upstream rationalisation.
Customer and market adaptation is another downstream necessity. Closures force substitutions—epoxy primers may need to be replaced with PU alternatives, for example, or solvent-based topcoats with waterborne systems. Dual‑spec options and proactive communication allow coatings producers to manage performance trade‑offs transparently, maintaining trust even when upstream supply changes force reformulation.
Finally, digitalisation and supply‑chain visibility become critical as closures fragment supply chains. With resins and solvents sourced from multiple regions, impurity profiles and lead times vary. Advanced ERP systems and blockchain traceability help coatings manufacturers manage allocation decisions and quality assurance, ensuring that variability caused by upstream contraction does not undermine compliance or customer confidence.
The Fear of the Domino Effect
Europe’s chemical sector is entering a period of accelerating decline, with ageing infrastructure, high energy costs, and aggressive global expansion elsewhere eroding competitiveness. Whereas the news headlines have focussed so far on the plant closures, the greater underlying fear is of a detrimental knock-on or domino effect, not only within the entire chemicals supply chain, but extending into downstream European industries such as automotive, industrial manufacturing, electronics, or construction.
Reacting to Dow’s announcement of plans to shut down its steamcracker facilities in Saxony-Anhalt, the state’s Minister of Economic Affairs emphasised “the critical role the steamcracker plays in downstream industries” and warned that its closure could “disrupt both domestic and European supply chains”.
Some companies further downstream have already been driven to explore different countermeasures. Wacker implemented a cost-savings program in October, aimed at saving EUR 300 million annually by focussing on reducing manufacturing expenses. Half the targeted savings will be generated through workforce reductions, with more than 1,500 positions expected to be eliminated worldwide (the majority at sites in Germany).
For coatings and paint manufacturers, the impact of these closures means structural exposure to volatility in resins, solvents, and intermediates. With many of the global leaders within the coatings industry (like Akzo, BASF, Jotun, Hempel) active in Europe, they represent a real threat to a EUR 40 billion market. But Europe’s chemical contraction is not just a supply‑chain challenge—it is a structural redefinition of how resins, solvents, and additives are sourced, qualified, and integrated into product portfolios. Long‑term resilience will depend on embedding sustainability, digitalisation, and diversified supply into operating models, ensuring continuity of performance and credibility with customers and regulators in a structurally tighter market.
To learn more, reach out to authors Philip Marsh and Wayne Daniell, Ph.D., at pmarsh@chemquest.com or wdaniell@chemquest.com, respectively.
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