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Over the past 18 months, Europe’s petrochemical industry has experienced an unprecedented wave of olefin capacity cuts. Faced with a persistent industry downturn and short-term pessimistic outlooks, European petrochemical producers ultimately took action by shutting down 7 steam cracking units, significantly altering the regional supply landscape. According to S&P Global Commodity Insights, these 7 cracking units that have been permanently shut down or are scheduled to be shut down by the end of 2027 together have an ethylene production capacity of around 4.5 million tons per year, along with a propylene production capacity of 2.3 million tons per year and a butadiene production capacity of 430,000 tons per year. As the planned shutdown measures are gradually implemented, the number of existing ethylene plants in Europe is expected to drop below 50. According to S&P Global, the number of ethylene plants in Europe will drop to 48 by 2026, and further decrease to 46 by 2029. Compared to the 60 ethylene plants in 2015 with a total designed capacity of over 26 million tons per year, the projected capacity for 2029 is only slightly higher at around 22 million tons per year. Although Ineos’ 1.45 million tons per year ethylene cracker at \"Project One\" in Antwerp, Belgium, will provide temporary capacity support, the fate of several other crackers in Europe remains uncertain amid a weak macroeconomic environment, ongoing sluggish demand prospects, and high costs for energy and raw materials. Based on the information released by various major companies so far, Europe will continue to shut down cracking units on a large scale. Both Shell and Saudi Basic Industries Corporation (SABIC) said they would reevaluate and optimize their European portfolios. Its portfolio includes 4 pyrolysis units in the Netherlands, Germany, and the UK, with a total ethylene production capacity of 2.6 million tons per year. BP is looking for a buyer for its integrated refining and petrochemical assets in Gelsenkirchen, Germany. Dow Corporation announced that it would permanently shut down its 510,000 tons per year mixed feed cracking unit in Boren, Germany, by the fourth quarter of 2027, and it ceased operating its LCH3 unit in Terneuzen, the Netherlands, in June for economic reasons. TotalEnergies plans to shut down its 550,000 tons per year NC2 cracking unit in Antwerp by the end of 2027 in order to address the imbalance between market supply and demand. Such a drastic decision to shut down the pyrolysis units is due to the current difficulties in the industry. Shell CEO Ben van Beurden spoke bluntly, saying that the company is stepping up its assessment of its globally operating chemical assets, which are continuously losing money, in an effort to stop the losses. Weiswang revealed that the options under careful evaluation include the possible selective shutdown of facilities in Europe, as well as finding partners for America’s chemical assets. According to Shell’s 2024 annual report, the company has an ethylene production capacity of 1.71 million tons per year in Europe, and 3.82 million tons per year in the United States. SABIC CEO Al-Fadhi emphasized that the portfolio will continue to be optimized, with no exclusion of exiting certain markets in the future. “Under the current conditions of the petrochemical market, the pressure to reduce costs is imminent. ”Salah al-Hareky, SABIC’s executive vice president, said at the same earnings briefing. Dow CEO Jim Fittling revealed that the board has approved the closure of three chemical plants in Europe, with the aim of adjusting regional production capacity, reducing business sales risks, and getting rid of assets that are costly and energy-intensive, in order to address the structural challenges in the European market and improve profitability. In the UK, the Ineos Grangemouth plant, which continues to suffer losses due to high energy prices and a carbon tax, faces the risk of being shut down in the future. In 2024, the plant’s energy costs were 100 million euros higher than those of similar facilities in the United States, with additional expenses of 30 million euros due to carbon taxes. According to industry insiders, the current operating rate of cracking units in Europe is around 75%. By reducing the ethylene production capacity by 4.5 million tons per year, the operating rate is expected to rise to around 85% by 2030, thereby helping to balance the olefin market. However, the commissioning of Ineos’ new plant in Antwerp will offset some of the shut-down capacity, and the European petrochemical industry may still need to phase out older plants.