Francesca Landini, Pietro Lombardi, Mohi Naradan and Arathy Somasekhar
Milan/New Delhi/Houston (Reuters) -Europe’s Petrochemical Industry is solved after years of losses and rapid expansion of the global capacity led by China.
High production costs and aging facilities, European producers struggled, which made the region dependent on imports of primary chemicals such as ethylene and propylene, plastics, pharmaceuticals and building blocks for numerous industrial goods.
“The rest of the world is building more than 20 new crackers, while the rest of the world is building more than 20 new crackers,” the European founder Jim Ratcliffe, the founder of Ineos, fits the industrial decline. ” He said.
The billionaire won his money by acquiring petrochemical plants from BP and others, and criticized the lack of political action with other industrial leaders.
This month, the European Commission promised to support strategic chemical production for its industries such as Ethylene and Propylene. It requires expanding state aid to modernize plants and public tenders to choose the goods made in Europe – similar to the 2023 legislation for metal and minerals.
However, the movement may be too late to reverse the damage.
“This is like being in Titanic – you can’t stay in denial. Go and find a lifeguard,” the Italian Energy Group Chief Giuseppe Ricci said.
Versalis, the chemical enterprise of ENI, has accumulated more than 3 billion euros ($ 3.5 billion) in the last five years, Ricci said Ricci, the company closed the last two steam crackers of Italy and invested 2 billion euros in bio refiners and chemical recycling.
Other global groups are closing or reviewing European chemical assets in Dow, Exxonmobil, Totalenenergies and Shell.
Most of the planned closures target crackers, a unit that converts hydrocarbons into ethylene, propylene or other primary chemical materials.
A document published by eight EU countries in Petrochemical in March, said 50,000 work may be at risk due to the potential closure of more crackers in Europe by 2035.
The EU’s plants are mainly small and medium -sized and under 80% of the average usage rate – an non -economic level.
According to Wood Mackenzie, consulting is at risk of 24.5 million metric tons – high or middle closing up to 40% of the EU’s total ethylene capacity of 24.5 million metric tons.
“The proportion of European crackers at risk is much higher than other regions,” said Robert Gilfillan, President of Plastic and Recycling Markets in Wood Mackenzie.
While elderly European plants use it as a raw material, the US and the Middle East use cheaper raw materials such as etane, which is a by -product of Shayl gas.
New addiction
According to the consulting company name Analytics, the ethylene capacity of North America will rise from 54 million to 2030 to 58 million metric tons.
Huang Yinguo, CEO of Chinese National Chemical Information Center, said in a statement in May that China will add 6.5% to its ethylene capacity that it will produce about 87 million metric tons of ethylene every year between 2025 and 2030.
This is more than the EU’s current capacity.
Chinese manufacturers are also building police stations in Southeast Asia to export carbon taxes and western tariffs in Chinese goods to export to Europe and North America.
The organs of the Petrochemical Industry of the countries said in a statement in May, Japanese and South Korean companies that cannot compete have kept their use rates low since 2023.
European policy makers are now facing a definite choice: Determined intervention or follow the chemical backbone of the continent.
In the March documents, countries such as France, Italy and Spain called for “Critical Chemicals Law” because the latest EU data is a clear importer of ethylene and propylene every year in the 2019-2023 period.
EU Industry Commissioner Stéphane Séjourné said Brussels will determine strategic materials and production areas.
“About this sovereignty – protecting our steam crackers,” he said to journalists this month.
However, sovereignty comes at a cost. According to Citi analyst Sebastian Satz, most European crackers are over 40 years of age. And ethylene production that uses Naphtha in Europe is the cost of about $ 200 metric tone in the Middle East with less than $ 400 in the United States if it is used in the United States, and a presentation in March.
‘Sleeping to the fall’
Some companies make great betting on survival.
Ineos, one of the most advanced petrochemical facilities in Europe in Cologne, builds 4 billion euros in Antwerp in Antwerp – the first new cracker in Europe in about 30 years is 1.45 million metric tons of ethylene production capacity.
In 2026, the facility aims to compete with Chinese production and to meet local demand with a lower carbon footprint.
Consolidation in the Middle East creates new global giants.
A merger of $ 60 billion between Abu Dhabi National Oil Company and the OMV of Austria will form Borouge Group, the world’s fourth largest polyolefins manufacturer. The company plans to export polymers directly to Europe by competing directly with us and Asian companies.
Analysts say Europe’s petrochemical production will not completely disappear, but it will become the area of several dominant players.
“Operation and Technology Management Professor Enzo Baglieri at the SDA Bocconi Administrative School in Milan said,” Only major European companies, which have a market share to determine competitive prices, will continue to produce ethylene. ” He said.
(1 $ = 0.8604 euro)
(America Hernandez in Paris, Shadia Nasralla in London, Marek Strzelecki in Warsaw, Julia Payne in Brussels;
