"Chemicals, Steel Firms in Europe Squeezed by China, Tariff Woes"

The chemical and steel industries in Europe are facing a perfect storm of challenges that threaten their very existence. Rising energy costs, regulatory burdens, and intensifying global competition are pushing these sectors to the brink. Dr. Ilham Kadri, CEO of Syensqo and President of Cefic and ICCA, has issued a stark warning: Europe’s chemical industry is at a tipping point. Without urgent policy action, Europe risks further industrial decline.

The situation is dire. Energy costs in Europe are 4-5 times higher than in competing regions, leading to over 11 million tonnes of chemical production capacity closures announced for 2023-2024. Europe’s market share in chemicals has fallen by 11% in a decade, while China gained 9%. This is not just a numbers game; it’s a matter of survival for millions of jobs and the backbone of Europe’s manufacturing sector.



The regulatory environment in Europe is a labyrinth of fragmentation and uncertainty. Despite the EU’s ambition for a single market, regulatory discrepancies across the 27 member states create substantial obstacles for businesses. Dr. Kadri emphasizes the need for uniform EU-wide rules that prevent national discrepancies, stating, "We need to lower the barriers to the single market." This fragmentation leads to increased administrative burdens and compliance costs, which can hinder the ability of firms to operate efficiently and access markets seamlessly.

In contrast, competing regions like the US and China offer more predictable regulatory environments. For instance, Syensqo's expansion in the US, where it is now the largest market, reflects a broader trend where companies are moving due to lower energy costs, more predictable regulation, and stronger investment incentives. Kadri notes, "At the end of the day, we go where our customers are," highlighting the importance of a favorable business climate. This trend is further supported by the fact that Europe’s market share in chemicals has fallen by 11% in a decade, while China gained 9%, indicating that the regulatory and administrative burdens in Europe are pushing investment abroad.

The regulatory environment in China is also more favorable for chemical and steel firms, as evidenced by the significant market share gains. China's regulatory framework is often seen as more streamlined and supportive of industrial growth, which has allowed it to capture a larger portion of the global chemical market. In contrast, Europe's slow response and uncertain regulatory landscape are already pushing investment abroad, as companies seek more stable and supportive environments for their operations. Kadri warns, "Without immediate reforms, Europe risks losing its chemical industry—and economic strength—to global competitors," underscoring the urgency of addressing these regulatory and administrative burdens.

To create a more unified regulatory framework, Kadri suggests several steps. Firstly, there is a need for "uniform EU-wide rules that prevent national discrepancies." This would ensure that businesses face consistent regulatory requirements across the EU, reducing the complexity and cost of compliance. Secondly, she advocates for better coordination of policies at both the EU and member state levels. This includes "financing the competitiveness" and "promoting skills and quality jobs," which are essential for maintaining a competitive industrial base. Additionally, Kadri stresses the importance of integrating EU industrial policy into the broader strategic agenda, which would provide a more cohesive approach to regulatory and economic issues.

Kadri's call for action is supported by the Antwerp Declaration, presented by 73 chemical industry CEOs in February 2024. This declaration outlines ten key priorities, including the reduction of administrative burdens and the integration of EU industrial policy. The declaration aims to restore the business case in Europe, safeguard high-quality jobs, and achieve climate neutrality and circularity. By addressing these priorities, the EU can create a more unified regulatory framework that supports the operational efficiency and market access of chemical and steel firms.

The stakes are high. Europe needs to move from the ambition ‘to be’ to the determination ‘to do.’ Kadri stresses, urging Europe to shift from rhetoric to action. She acknowledges recent EU initiatives, such as the Competitiveness Compass and the upcoming Clean Industrial Deal but insists that execution is critical. The Chemical Industry Package, expected later this year, must deliver tangible regulatory and economic improvements.

In conclusion, the chemical and steel industries in Europe are at a crossroads. The perfect storm of rising energy costs, regulatory burdens, and global competition threatens their survival. Europe must act swiftly and decisively to create a more unified regulatory framework, reduce administrative burdens, and ensure abundant supplies of affordable energy. The future of Europe’s industrial strength and economic prosperity depends on it.