Chemicals Industry Roundup 2025: Continued Downcycle and Structural Shifts

The global chemical industry faced a year of significant uncertainty in 2025, driven by shifting US tariffs, geopolitical tensions, and a prolonged downcycle. While regions like India saw growth, the European sector experienced a severe contraction, leading to numerous plant closures and job losses due to high energy costs and weak demand. This period of instability highlights a critical restructuring of global supply chains as companies prioritize margin maximization amid intense international competition.

Throughout 2025, the chemical industry remained entangled in supply chain volatility exacerbated by the implementation of US tariffs and ongoing geopolitical conflicts. Industry consultant Victoria Meyer noted that companies spent much of the year reconfiguring product movement to protect margins against shifting trade policies. While the impact of Red Sea shipping disruptions decreased, the Chemical Business Association (CBA) reported that the Russia-Ukraine conflict's influence on supply chains intensified. These factors, combined with excess global capacity driven largely by China, have created a challenging environment for traditional manufacturing hubs.

The European chemical industry faced a particularly dire situation, with output in the UK and Germany falling 30% and 18% respectively below 2019 levels by the second quarter of 2025. High energy prices, regulatory costs, and competition from China forced several major players to announce site closures. Sabic shuttered its olefins cracker in Teesside, UK, while Dow Chemical confirmed the closure of its ethylene cracker in Böhlen, Germany, and its basic siloxanes plant in Barry, UK. ExxonMobil also announced the February 2026 closure of the Fife Ethylene Plant in Scotland, citing the facility's inefficiency and a required £1 billion investment that the UK government declined to subsidize.

The polymer segment is under extreme pressure, with Wood Mackenzie warning that up to 40% of EU ethylene capacity is at risk of closure. Projections suggest that 50,000 jobs could be lost by 2035 if 20 additional European crackers are shut down. In response, the European Commission introduced an action plan in July 2025 to bolster competitiveness by addressing energy costs and establishing a Critical Chemical Alliance. Conversely, the UK government committed £120 million to the Grangemouth petrochemicals complex to preserve the nation's last remaining ethylene plant, illustrating the divergent strategies being used to manage the industry's structural decline.