Europe vs. the World: Why Commodity Chemical Recovery Is Bypassing European Producers

Global chemical production was initially projected to grow around 3.5% in 2026, but that headline masks a sharp regional divide. More recent forecasts have been revised lower, with Deloitte expecting global chemical production growth of about 2%, while BASF estimates 2.4% growth excluding pharmaceuticals. The important point is that most of the expansion is still concentrated in emerging markets, while mature economies—including Europe—remain under pressure.

Europe Is Starting From a Much Weaker Base

European producers cannot interpret modest production growth in the same way as fast-growing Asian markets because Europe's industry has already lost significant ground. Cefic says EU chemical output remains 10% below its 2014–2019 pre-crisis average, while capacity utilization sits at only 74%. Europe's share of global chemical sales has also fallen to around 13%, compared with China's 46%, demonstrating how much the industry's center of gravity has shifted.

Germany Shows How Deep the Problem Runs

Germany is at the center of Europe's competitiveness challenge. Its chemical industry has faced high energy costs, weak industrial demand and increasing competition from imports and lower-cost producers. Even where production begins to stabilize, a recovery from a depressed base does not necessarily restore the industry's previous competitive position. This distinction is critical when comparing European growth percentages with production increases in China and other emerging markets.

Energy Costs Keep European Producers Under Pressure

One of the biggest structural disadvantages is Europe's energy cost position. European chemical companies continue to operate with significantly higher energy-related costs than many competitors with access to cheaper feedstocks and energy. Cefic's latest data also shows that EU27 chemical trade weakened sharply in early 2026, with exports falling 12.4% and imports declining 15.7%, reflecting softer external demand and weaker domestic industrial activity.

Asia Continues to Capture the Volume Growth

The contrast with Asia is substantial. China alone now accounts for nearly half of global chemical sales, while emerging markets are expected to continue growing faster than mature economies. BASF forecasts 3.6% growth for emerging-market chemical production in 2026, compared with a 0.6% decline for mature economies. That means global growth can look healthy on paper while European plants continue operating below capacity.

The Meaning of "Recovery" Depends on the Starting Point

The real intelligence takeaway is that a 3% or 3.5% global growth figure does not represent the same opportunity everywhere. For producers in Asia and the Gulf, growth can mean new capacity utilization and expanding market share. For Europe, even positive production growth would first have to repair years of lost output, low utilization and declining competitiveness. With capacity utilization still at 74% and output below its pre-crisis benchmark, Europe's challenge is not simply to participate in the next growth cycle—it is to remain competitive enough to capture it.