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Europe’s petrochemical sector stands at one of the most decisive crossroads in its postwar history. Once the engine of industrial expansion and a global leader in plastics and chemicals, the region’s industry is now being reshaped by structural stagnation, global overcapacity, energy cost inflation, and tightening carbon regulation. At the same time, the rise of Asia as the dominant hub of petrochemical capacity and the enduring cost advantage of U.S. shale gas have placed Europe’s producers under sustained pressure. The transformation under way is not merely cyclical, it is structural.
The drivers of this shift are numerous. Feedstock economics have tilted in favor of North America and the Middle East, where ethane-based steam crackers operate below Europe’s cost base. Meanwhile, China has built out world-scale capacity at astonishing speed, creating a situation of global oversupply. Add to this the unique burden of Europe’s energy and carbon policies, alongside geopolitical disruptions to feedstock security, and the pressure on legacy assets has become existential.
Europe’s petrochemical transformation: Navigating headwinds, unlocking resilience
Yet, within this turbulent environment, new pathways are emerging. Europe’s integrated petrochemical networks, long built around the “Verbund” concept of utilizing every fraction of the feedstock slate, offer unique resilience advantages. Strategic partnerships between upstream cracker operators, midstream integrators, and downstream customers will be critical in stabilizing supply and value chains, extracting value from by-products, and enabling decarbonization. Among the players positioned at this interface is Evonik Oxeno, whose integrated C4 business exemplifies how innovation, flexibility, and sustainability can help prevent bottlenecks and maintain competitiveness in an otherwise challenging market.
Lower chemical output (in Europe)
During the second half of the 20th century, Western Europe became a world leader in plastics and chemicals, with production peaking at 314 million tons in 2007. But the financial crisis of 2008–09 marked the beginning of long-term decline. Chemical output in the EU-27 shrank at an average of –0.8% annually between 2013 and 2023, and in 2023 production plunged 6.6% compared with the previous year, followed by only a 2.5% rebound in 2024. Europe’s share of global chemical sales has since halved, from around one-third in 2000 to just 13% in 2023, while China surged to roughly 43%. Once a net exporter, the EU has even recorded trade deficits in chemicals, with a €5.6 billion shortfall in the first half of 2022 amid an energy crisis.
The state of Europe’s petrochemical industry cannot be understood without reference to feedstock dynamics. While European crackers remain heavily dependent on naphtha, competitors in North America and the Middle East enjoy abundant, low-cost ethane. By 2024, European ethylene production was estimated at roughly $800 per ton—double the U.S. cost ($400/t) and four times that of the Middle East ($200/t). The 2022–23 energy crisis further exposed vulnerabilities: average utilization at EU steam crackers fell to around 75% (vs. 85–90% in healthy times), forcing several permanent closures.
While Europe stagnated, Asia surged. China alone has built ethylene capacity of 55 million tons per year as of 2024, with forecasts pointing toward 80 million by 2028, accounting for roughly half of new global capacity. Other Asian economies, from India to South Korea, have similarly added large-scale assets in pursuit of self-sufficiency. The result has been structural global overcapacity, with supply outstripping demand across key petrochemical chains. For Europe, the consequences have been severe: spot margins for ethylene in Northwest Europe were barely one-third of their five-year average in early 2024, and operators across the continent announced shutdowns of about 1.0–1.1 million tons per year of olefins capacity in 2023–24. ExxonMobil shuttered its 425,000 tons per year cracker in France, SABIC closed one of its 550,000 tons per year Geleen (NL) units, Dow idled a 600,000 tons per year Terneuzen (NL9 line, and TotalEnergies committed to shutting a 640,000 tons per year Antwerp (BE) cracker by 2027. With nearly half of Europe’s 40 crackers under 500,000 tons capacity, the trend toward rationalization is likely to continue.
Overlaying these structural pressures are Europe’s high energy costs and carbon burden. Industrial gas and electricity prices spiked to 4–8 times U.S. levels during the energy crisis, and even after easing, they remain structurally higher due to taxes, network charges, and levies absent in competitor regions. INEOS has highlighted that one German chemicals site pays €100 million more for gas and €40 million more for electricity annually than a comparable U.S. plant.
The sustainability imperative adds yet another dimension. The EU’s Green Deal and Climate Law set binding targets to cut greenhouse gas emissions by 55% by 2030 and 90% by 2040, with full climate neutrality by 2050. For petrochemical producers, this means decarbonizing energy-intensive processes while shifting toward non-fossil feedstocks.
Combined with carbon costs, European crackers face what industry leaders have termed a “triple penalty”: expensive feedstock, elevated energy overhead, and strict CO₂ regulation. Unless addressed, these factors risk deterring further investment and accelerating site closures.
The geopolitical dimension adds further fragility. Europe’s heavy reliance on imported oil and gas became starkly visible during the Ukraine war, when Russian pipeline gas deliveries collapsed from nearly half of EU supply to under one-fifth by 2023. The pivot to liquefied natural gas introduced dependence on volatile seaborne markets, Asian demand, and shipping bottlenecks. The sabotage of the Nord Stream pipelines, attacks near the Red Sea, and risks around the Strait of Hormuz have only reinforced the sense that Europe’s feedstock security can no longer be taken for granted.
Against this backdrop feedstock flexibility, integration, and co-product valorization have become the levers of resilience. Europe’s naphtha crackers yield diverse side streams that, if effectively processed, can underpin viable value chains. This is where specialized midstream players become essential, creating synergies between upstream and downstream partners.
One prime example is the integrated C4-Verbund system operated by Evonik Oxeno functioning as an operative partner independent of ownership in Marl, Germany, and Antwerp, Belgium. By cross-utilizing outputs across processes, Oxeno achieves nearly 100% utilization of the C4 fraction. Crucially, the company has developed unique catalytic and purification technologies that allow it to process refinery FCC-C4 streams, a sulfur-rich cut typically used only for fuel blending. By upgrading FCC-C4 into chemical feedstock, Oxeno has unlocked value which would otherwise remain untapped.
The importance of this role lies not only in utilization but also in preventing bottlenecks. Cracker operators rely on operative partners like Oxeno to absorb by-product streams, freeing them to focus on their primary products such as ethylene and propylene. In practical terms, Oxeno’s integrated process network takes in more C4 raw material than any single downstream unit and through a series of linked processing steps it converts all components of crude C4 into sellable products. This stabilizes value chains at both ends: upstream operators gain continuity, and downstream customers enjoy steady supply despite volatility in feedstock quality or availability.
Crucially, Oxeno couples this flexibility with decision-centric, scenario-based planning using data-driven supply & operations planning (S&OP) tools. Furthermore Oxeno has laid out a roadmap to reduce process-related CO₂ emissions nearly to zero and can process renewable C4-based feedstocks. Its Marl and Antwerp sites have been ISCC Plus and ISCC EU certified since 2021, enabling full traceability of sustainable raw materials across the value chain. This not only helps customers meet their own sustainability commitments but also ensures that Europe’s petrochemical sector continues to align with regulatory expectations.
Looking ahead, the question is whether Europe can overcome its high-cost disadvantage to remain a viable petrochemical hub. The answer depends on how effectively the industry can harness its existing strengths: integrated value chains, feedstock flexibility, co-product utilization, and a culture of collaboration. The transformation is already visible. Investments in advanced ethane-based capacity, like INEOS’s Project ONE in Antwerp, point to selective modernization. At the same time, partnerships across the chain, from cracker operators to midstream integrators and downstream customers, are emerging as the defining feature of resilience.
If Europe can master this balancing act, it may retain its role as a global hub not by matching the lowest costs, but by offering the most resilient and sustainable networks. Companies like Oxeno operating at the intersection of upstream and downstream, can show how to stabilize margins, safeguard value chains, and open pathways to circular, low-carbon production.
Through integration, collaboration, and innovation, the region has a chance to reinvent itself for a net-zero world. For that reinvention to succeed, reliable partners that can absorb by-products, enable feedstock flexibility, and pioneer sustainable solutions will be indispensable.
For a more detailed analysis of Europe’s petrochemical transformation and Oxeno’s role as a trusted C4 partner, we invite you to download the full white paper: Challenges and Opportunities during the Transformation Process in the Petrochemical Industry.
For more information, visit Evonik Oxeno.
