The EU27 chemical industry is confronting a harsh reality: competitiveness remains far below pre-crisis levels and the sector continues to grapple with weak demand, rising global competition and persistently high energy costs.  

This inference can be drawn from a recent report by European Chemical Industry Council or Cefic, the leading industry body representing chemical manufacturers across Europe. 

Compared with the 2014–2019 average, as per the report, the industry’s performance has sharply deteriorated. Commodity chemicals and petrochemicals are particularly exposed as China’s large-scale production capacity and lower costs give it a decisive advantage in global markets. 

Energy prices are a central factor behind Europe’s declining competitiveness. Throughout 2025, European gas prices were 2.5 times higher than in the United States, leaving EU producers at a sustained disadvantage. Electricity prices also remain significantly higher than in the US, further underscoring the energy cost gap confronting the European chemical sector. 

Capacity utilisation across the EU27 chemical industry remains at historic lows—well below both the EU’s long-term average and the level recorded in the United States. Weak demand and declining business confidence continue to weigh heavily on the sector. 

At the same time, global trade tensions have intensified the pressure. The business environment for European chemical companies has become increasingly risky amid unprecedented disruptions linked to US tariffs. EU27 chemical export values to the United States have been declining since March 2025. 

Despite maintaining a trade surplus in value—driven largely by specialty and consumer chemicals—the sector’s overall position has weakened. In 2025, the EU27 chemicals trade surplus fell by €7.3 billion compared with 2024, while the industry recorded a trade deficit in volume terms. 

Slight improvement after sharp decline 

Business sentiment in the EU27 chemical industry showed modest improvement at the end of 2025. According to the latest European Commission business and consumer survey, confidence rose slightly in December for the second consecutive month. 

The improvement was driven mainly by stronger current order-book levels, which supported the positive trend observed in the final two months of 2025. Data also shows a marked improvement in managers' production expectations in December 2025 compared to November 2025, while assessment of stocks of finished products slightly increased. 

However, the longer-term picture remains troubling. Over the past 12 months, confidence in the EU27 chemical industry deteriorated significantly in 2025 compared with 2024. Among the largest EU economies, the confidence indicator fell sharply in France (-6.1) and Germany (-4.9). Declines were also recorded in Poland (-3.9), the Netherlands (-1.2), Spain (-0.9) and Italy (-0.7). 

Demand conditions have been weak since March 2022. As the industry approaches four years since the onset of the downturn in March 2026, persistently low business confidence remains one of the sector’s biggest concerns.

 Chemical output lags behind manufacturing 

The EU27 manufacturing sector posted modest growth in 2025, with output rising 1.6% compared with 2024. However, many downstream industries that consume chemicals reported declining activity. 

The automotive sector, for example, saw output fall by about 2.3%. 

Against that backdrop, the EU27 chemical industry performed even worse. Output dropped 2.4% in 2025, significantly underperforming the broader manufacturing sector. Production remains roughly 11% below pre-crisis levels seen between 2014 and 2019. 

Uncertainty continues to dampen investment and industry forecasts for 2026 remain modest. 

Weak demand hits sales & production 

Weak demand has also weighed heavily on chemical sales. In 2025, EU27 chemical prices were 0.5% lower than in 2024, while sales in value terms fell by 3.2% in the first eleven months of the year. 

The broader economic uncertainty is taking a toll on the European business community. With demand growth still lacking, the chemical industry continues to struggle in a difficult global economic environment marked by high energy costs and sluggish markets. 

Production trends across major EU countries reveal a fragmented landscape. The Netherlands recorded a 4.9% decline in chemical production in 2025, while Germany fell 3.3% and France dropped 2.9%. Belgium saw a 1.3% decline, while Poland and Italy also reported reductions of less than 3%. Spain was the only major producer to post a slight increase, with growth of under 1%. 

Petrochemicals hardest hit 

The downturn has affected chemical segments unevenly, with petrochemicals bearing the brunt of the recession. 

Petrochemical production dropped by more than 10% in 2025 compared with 2024. Basic inorganics fell 2.7%, while polymers declined by 6.9%. Among specialty sectors, dyes and pigments recorded a sharper drop of 7%, while most other specialty subsectors declined by less than 2%. 

Trade surplus shrinks over falling exports 

External trade figures reflect the challenging environment. 

Between January and October 2025, EU27 chemical exports fell 3.8% compared with the same period in 2024, while imports edged up by 0.1%. As a result, the EU27 chemicals trade surplus stood at €31.3 billion in the first ten months of 2025—€7.3 billion lower than a year earlier. 

Despite the decline, the EU continues to maintain a surplus in value terms thanks largely to strong performance in specialty and consumer chemicals, each generating surpluses of more than €24 billion. 

However, petrochemicals generated the largest trade deficit at €19.2 billion, followed by basic inorganics with a deficit of €1.4 billion. 

Exports to global markets remain substantial. From January to October 2025, total EU27 chemical exports reached €183.2 billion. The United States remained the largest export destination at €33.2 billion, followed by the United Kingdom (€21.3 billion) and China (€14.3 billion). 

On the import side, China was the largest supplier to the EU27 chemical market with €27.8 billion in shipments, followed by the United States (€25.5 billion) and the United Kingdom (€15.7 billion). 

Trade deficit surges 

While the EU still records a trade surplus in value, the picture in physical volumes is deteriorating rapidly. 

The EU27 chemicals trade deficit in volume terms reached 9.1 million tonnes in the first ten months of 2025—an increase of 6.1 million tonnes compared with 2024. Overall, the trade deficit in volume has more than tripled in a single year. 

Basic inorganics accounted for the largest deficit at 6.3 million tonnes, followed by petrochemicals at 4.7 million tonnes and polymers at 3.0 million tonnes. Specialty chemicals and consumer chemicals remain the only segments generating a trade surplus in volume terms. 

Together, these trends paint a stark picture: Europe’s chemical industry remains under intense pressure from weak demand, high energy costs and fierce global competition, with only limited signs of recovery emerging at the end of 2025.