Temporary Uptick For Dutch Chemicals Masks Ongoing Challenges

The Dutch chemical industry is experiencing a temporary uptick in output due to trade disruptions at the Strait of Hormuz. However, structural issues including global overcapacity, high energy costs, and intense competition from China are expected to resume as trade flows normalize.

Key Takeaways

• 1.Temporary supply chain disruptions caused by the Strait of Hormuz closure have provided a short-term boost to Dutch chemical producers by reducing Asian competition.
• 2.Structural headwinds, including global overcapacity (notably in China), high energy costs, and carbon emission regulations, are expected to persist after trade flows normalize.
• 3.The EU chemical sector faces increasing pressure, with significant job cuts announced by major players like Dow and Evonik, reflecting a broader trend of European facility closures.

Table of Contents

• Middle East conflict offers temporary relief from import pressure
• Chemical production has increased slightly
• Pressure on chemical output will rise again when Hormuz reopens further
• Global overcapacity, cheap imports and tariffs will continue to hurt structurally
• The large EU trade deficit in chemical products with China continues to increase
• as will high energy prices and rising CO2 costs
• European gas price risen and is very high compared to US gas price
• Selling prices and orders are rising, but optimism remains limited
• Fuller order books, price increases expected
• European Commission wants to make chemicals more competitive and greener
• Dutch government narrows cost gap with neighbouring countries

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