22/07/2025

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EU’s chemical industry seeks lifeboat

MILAN: Europe’s petrochemical industry is unravelling under a wave of plant closures after years of losses and a rapid expansion of global capacity led by China. High production costs and ageing plants have left European producers struggling, making the region increasingly dependent on imports of primary chemicals such as ethylene and propylene, the building blocks for plastics, pharmaceuticals and countless industrial goods. “While the rest of the world is building over 20 new crackers, Europe is sleepwalking into industrial decline,” INEOS founder Jim Ratcliffe said during a recent event, referring to a unit in petrochemical plants. The billionaire made his money buying up petrochemical plants from BP and others, and along with other industry leaders has criticised a lack of political action. The European Commission responded this month with a pledge o 40% of Europe’s ethylene capacity at risk of closure

40 years old, compared to just 11 years in China, according to Citi analyst Sebastian Satz. And ethylene production in Europe using naphtha costs US$800 a metric ton, versus less than US$400 a metric ton in the US if ethane is used, and around US$200 a metric ton in the Middle East with ethane, Eni said in a presentation published in March. Some companies are betting big on survival. INEOS, which operates one of Europe’s most advanced petrochemical facilities in Cologne, is building a €4 billion ethane cracker in Antwerp – the first new cracker in Europe in roughly 30 years, with production capacity of 1.45 million metric tons a year of ethylene. The plant, due online in 2026, aims to rival Chinese production and meet local demand with a lower carbon footprint. Analysts say Europe’s petrochemical production will not disappear entirely but will become the domain of a few dominant players. “Only major European companies with the market share to set competitive prices will continue to produce ethylene,” said Enzo Baglieri, professor of operations at SDA Bocconi School of Management in Milan. – Reuters

Chemical Information Centre CEO Huang Yinguo said in May. That is more than triple the EU’s current capacity. Chinese producers are also building outposts in Southeast Asia to export to Europe and North America to bypass carbon taxes and Western tariffs on China-made goods. Japanese and South Korean firms, unable to compete, have kept utilisation rates low since 2023, the countries’ petrochemical industry bodies said in reports in May. European policymakers now face a stark choice: intervene decisively or watch the continent’s chemical backbone erode. In their March document, countries including France, Italy and Spain called for a “Critical Chemicals Act”, as latest EU data shows the region was a net importer of ethylene and propylene each year in the period 2019-2023. EU Industry Commissioner Stéphane Séjourné said Brussels will identify strategic supplies and production sites. “First and foremost, this is about sovereignty – keeping our steam crackers,” he told reporters this month. But sovereignty comes at a cost. Most European crackers are over

March said that 50,000 jobs could be at risk due to potential closures of more crackers in Europe by 2035. The EU’s plants are mainly small and mid-sized and have been running at an average utilisation rate below 80% – a level considered uneconomical. Up to 40% of the EU’s ethylene capacity – which totals 24.5 million metric tons – is at high or medium risk of closure, including shutdowns announced since late 2024, according to consultancy Wood Mackenzie. “The proportion of European crackers at risk is much higher than in other regions,” said Robert Gilfillan, head of plastics and recycling markets at Wood Mackenzie. While older European plants use naphtha as a raw material, the United States and the Middle East use cheaper feedstocks like ethane – a by-product of shale gas. North America’s ethylene capacity will grow to 58 million metric tons by 2030 from 54 million currently, said consulting firm ADI Analytics. China, meanwhile, will add 6.5% to its ethylene capacity every year between 2025 and 2030, when it will produce nearly 87 million metric tons of ethylene annually, China National

to support domestic production of chemicals deemed strategic for its industries, such as ethylene and propylene. It plans to expand state aid to modernise plants and require public tenders give preference to goods made in Europe – similar to the EU’s 2023 legislation for metals and minerals. But the move may be too late to reverse the damage. “It’s like being on the Titanic – you can’t stay in denial. You must go and find a lifeboat,” said Giuseppe Ricci, head of industrial transformation at Italian energy group Eni. Eni’s chemical business Versalis accumulated over €3 billion (RM14.8 billion) in losses in the last five years, Ricci said, as the firm shuts down Italy’s last two steam crackers and invests €2 billion in bio-refineries and chemical recycling. Other global groups Dow, ExxonMobil, TotalEnergies, and Shell are also closing or reviewing their European chemical assets. Most of the planned closures target crackers – a unit that turns hydrocarbons into ethylene, propylene or other primary chemical materials. A document issued by eight EU countries on petrochemicals in

UK consumer sentiment suffers first big fall in three years LONDON: British consumer sentiment had a marked fall for the first time in nearly three years last month, reflecting increased worries about job security, a Deloitte survey showed yesterday. Deloitte said its consumer confidence index dropped by 2.6 percentage points to 10.4% in the second quarter, its lowest since the first quarter of 2024. The fall was the first since the third quarter of 2022 – when inflation hit a double-digit peak and financial markets reeled from former prime minister Liz Truss’budget plans – apart from a 0.2 point decline last year which Deloitte did not view as statistically significant. “Concerns of a slowing labour market have left consumers worried about job security and income growth prospects, while persistent inflation and a high cost of living have negatively impacted sentiment towards personal debt,”said Deloitte consumer insight lead Celine Fenech. Businesses have blamed increased employment taxes and a higher minimum wage which took effect in April, as well as planned law changes to make it harder to dismiss new employees, for making them more reluctant to hire. Official data last week showed Britain’s unemployment rate rose to 4.7% in the three months to May, its highest since 2021, while inflation picked up to 3.6% in June, the highest since January 2024. Deloitte’s survey of 3,200 consumers was conducted between June 13 and June 16 and the consumer sentiment index is based on six questions about job security, job opportunities, income, debt, children’s welfare, and general health and wellbeing. A separate question about the state of the economy saw a 3.9 percentage point rise in its balance, but it was still 18.4 percentage points lower than a year earlier. – Reuters

US tariffs, laws push Stellantis into €2.3 billion H1 net loss PARIS: Jeep owner Stellantis said yesterday it suffered a massive loss in the first half of the year, when it felt the first impact of new US tariffs and took a massive charge following a change in American laws. Sales of vehicles fell by 6% in the second quarter year-on-year, after having dropped 9% in the first three months of 2025.

recent legislation eliminating the CAFE penalty rate and restructuring”. President Donald Trump’s massive tax and spending legislation, approved earlier this month, removed the penalties for not respecting the so-called CAFE fuel economy targets, meaning automakers can produce and sell more higher polluting cars in the US. Stellantis suspended its financial guidance in April due to the heightened uncertainty generated by US tariffs. The company said it was in the early stage of taking action to improve performance and profitability. – AFP

Stellantis said “the early effects of US tariffs” had a €300 million negative impact and disrupted its plans to respond to its struggling performance in North America. Automakers have struggled to respond to a new US tariff of 25% on imported cars that are not largely made within North America. Stellantis fell into a net loss when it took a €3.3 billion charge, which it said was “primarily related to programme cancellation costs and platform impairments, net impact of the

The €2.3 billion (RM11.4 billion) net loss in the first half of the year came as sales in North America continued to slump, down 25% by volume in the second quarter year-on-year. The carmaker, whose stable of brands also includes Peugeot, Citroen and Fiat, said first half net revenues dropped 12.6% to €74.3 billion, according to the preliminary and unaudited results. Ryanair Q1 profit more than doubles on higher fares DUBLIN: Irish no-frills airline Ryanair yesterday announced its net profit more than doubled in its first quarter thanks to higher air fares. Profit after tax soared to €820 million (RM4 billion) in the three months to the end of June from €360 million in the same period a year earlier. Passenger traffic rose 4% to almost 58 million and average air fares increased 21%. Revenue grew 20% to €4.34 billion. Ryanair said it also benefitted from the timing of Easter. Chief executive Michael O’Leary noted that passenger growth will be constrained over the full year due to “heavily delayed Boeing deliveries”. The airline “cautiously expects to recover almost all of last year’s 7% full-year fare decline, which should lead to reasonable net profit growth” in the full year, he added. However, he warned that the outlook remains “heavily exposed” to risks including tariff wars, macroeconomic shocks and conflicts in the Middle East and Ukraine. – AFP

Ryanair aircraft at Stansted Airport, northeast of London. – AFPPIC