Communicator

Wilton International, Teeside, Aerial View

SABIC's Teesside Closure: A Strategic Retreat Amid Europe's Industrial Decline

Saudi Basic Industries Corporation (SABIC) has confirmed the permanent shutdown of its Olefins 6 ethylene cracker at Wilton International, Teesside, ending 46 years of operations and placing approximately 300 jobs at risk. The decision, communicated to employees on June 25, 2025, follows a months-long pause on a £200 million conversion project to shift the plant to gas feedstocks. This move underscores a calculated corporate realignment driven by structural economic pressures rather than isolated financial struggles.

Vetted Motives: Beyond Profitability

• Energy Cost Crisis — SABIC’s closure directly results from Europe’s unsustainable energy economics. UK natural gas prices remain 3–5 times higher than U.S. and Middle Eastern benchmarks, eroding the plant’s competitiveness. Internal sources cited Britain’s "crippling energy prices" as a primary factor, compounded by insufficient government support for energy-intensive industries. The paused conversion—intended to modernize operations—became economically unviable amid these conditions.
• Policy and Regulatory Pressures — The UK’s carbon taxation regime added approximately £50 per ton of CO₂ emissions, disproportionately impacting cracker operations. Tees Valley Mayor Ben Houchen condemned the closure as "another symptom of national policy failure," noting the chemicals sector’s absence from the government’s newly unveiled Industrial Strategy. This regulatory burden, coupled with perceived governmental indifference, accelerated SABIC’s exit calculus.
• Global Market Realignment — SABIC’s retreat reflects a deliberate pivot away from high-cost regions. CEO Abdulrahman al-Fageeh explicitly linked the Teesside closure to a broader "rationalization of [SABIC’s] footprint in Europe," including options for "partial or full exit". The company recently shuttered its Geleen cracker in the Netherlands and is marketing €3 billion in European assets through Lazard and Goldman Sachs. These moves prioritize investment in integrated hubs in Saudi Arabia, Asia, and the U.S., where feedstock and energy advantages bolster margins.

Profitability Paradox and Strategic Reality

While Unite union criticized SABIC’s "disgraceful" closure amid £300 million in 2024 net profits, regional financial data reveals a stark contrast:

• SABIC’s European operations bled SAR 1.89 billion ($504 million) in Q4 2024 alone.
• Profits derived overwhelmingly from Middle Eastern and Asian assets, not European facilities.
• The Teesside plant—idle since 2020—represented stranded capital in a region where ethylene overcapacity and import competition suppressed margins.

Industry Implications

The shutdown intensifies Europe’s ethylene deficit, forcing derivative units like SABIC’s adjacent System 18 LDPE plant to rely on imported feedstocks. It also signals sector-wide vulnerability: BASF, Dow, and LyondellBasell face similar portfolio reviews amid what SABIC termed "sustained pressure on capacity utilization rates". Without intervention on energy costs and carbon leakage protections, Europe risks losing 20–30% of its ethylene capacity by 2030.

Stakeholder Responses

• Unite Union: Demanded government intervention, noting limited alternative employment for skilled workers.
• Tees Valley Mayor Ben Houchen: Urged "urgent intervention" to protect industrial jobs and supply chains.
• UK Government: Faced criticism for excluding chemicals from its Industrial Strategy days before the closure.

Conclusion

SABIC’s Teesside exit is not an anomaly but a bellwether for European heavy industry. The shuttered cracker epitomizes a structural shift: capital is fleeing high-cost, policy-constrained regions for competitive hubs. As SABIC’s al-Fageeh asserted, this closure aligns with "strategic portfolio optimization"—a euphemism for Europe’s industrial decline. Without coherent energy and industrial policies, such retreats will accelerate, eroding the continent’s manufacturing base irreversibly.

#sabic #wilton #plantclosure #teeside #europeanexit

Grangemouth oil refinery officially closes after 100 years in operation. Photo credit: yahoo

Grangemouth Refinery Halts Operations: Transition to Import Hub, Calls for Policy Reform, and Strategic Implications for Scotland's Energy Sector.

The end of crude oil processing at Scotland’s Grangemouth refinery marks a pivotal moment for the nation’s industrial and energy landscape. Petroineos, a joint venture between INEOS and PetroChina (CNPC), confirmed in late April 2025 that the site would transition from refining to serving as an import terminal for finished fuels, following sustained financial losses and mounting competition from larger, more efficient refineries abroad. This closure brings an end to more than 70 years of refining at Grangemouth, with the loss of around 400 jobs and significant concern for the local community, which has long depended on the site for stable employment and economic security

The decision has been met with regret and frustration by many in Scotland, including the Scottish Government, which described the closure as premature and detrimental to both the economy and the country’s transition to net zero. Workers and unions have voiced deep concerns about the lack of consultation and the adequacy of transition plans, fearing a repeat of the economic decline seen in other former industrial communities. While some government support for retraining and local investment has been pledged, the loss of Grangemouth’s refining capacity is widely seen as a blow to the region’s industrial fabric and a test of policymakers’ commitment to managing the energy transition responsibly.

Against this backdrop, INEOS Chairman Sir Jim Ratcliffe has been outspoken in his criticism of the UK’s energy and environmental policies. Ratcliffe argues that high energy costs and carbon taxes-particularly those imposed under the UK Emissions Trading Scheme (ETS)-are “squeezing the life out of” British industry and making it uncompetitive globally. INEOS faces a £15 million bill for carbon emissions at Grangemouth for 2024 alone, a cost Ratcliffe says is forcing the company to pause critical investments in green projects and efficiency upgrades. He warns that such policies risk accelerating deindustrialization, citing energy bills that are 400% higher than those in the US and double the European average. “This is not just INEOS; this is a reality for British manufacturers across the nation: carbon taxes and soaring energy costs are suffocating the industry,” Ratcliffe said. He has called for a fundamental rethink of the UK’s approach, urging, “Give us competitive energy costs, give us the incentives to invest in new assets and to play our part in building a strong sustainable industrial future,” emphasizing the need for entrepreneurial freedom and lower taxes to allow the energy sector to function and invest in decarbonization.

Strategically, the closure of Grangemouth means Scotland will now import all of its motor fuels, relying entirely on international supply chains to meet domestic demand. This shift increases exposure to global market fluctuations and supply risks, reducing the country’s energy self-sufficiency. While Petroineos has emphasized that the new import terminal will safeguard fuel supply for Scotland, the loss of domestic refining capacity leaves the nation more vulnerable to external shocks and diminishes its leverage in shaping fuel standards and supply terms. In effect, Scotland’s energy security and industrial autonomy have been significantly lowered, underscoring the far-reaching consequences of the Grangemouth closure for both the local community and the wider Scottish economy.

#petroineos #grangemouth #refinery #refining #ineos #cnpc #petrochina #plantclosure #carbontax #energytransition #netzero #ratcliffe

Kawasaki refinery aerial view @ENEOS Corporation

ENEOS to Restructure Petrochemical Operations with Planned Shutdown of Kawasaki Ethylene Unit by 2027

Tokyo | Feb 26, 2025 -- ENEOS Corporation has announced that it will begin considering ways to optimize its petrochemical production and supply network, with the expectation that one of its two ethylene production units at the Kawasaki Refinery Plant in Kawasaki City, Kanagawa Prefecture will be shut down. This decision is part of ENEOS’s Third Medium-Term Management Plan, which aims to establish a solid earnings base and strengthen the competitiveness of its petroleum refining and marketing operations. Safe operations and a stable supply of energy remain key priorities for the company.

The Japanese petrochemical industry is currently facing a structural decline in domestic demand for its products, as well as intense international competition, particularly from other Asian countries. The construction of new petrochemical plants, especially in China, has led to an oversupply situation, forcing existing ethylene production units in Japan to operate at lower rates. As a result, the industry is under significant pressure.

The ethylene production unit scheduled for termination is located in the Ukishima South Area of the Kawasaki Refinery Plant, with the shutdown planned for the end of fiscal year 2027. The Kawasaki Refinery Plant currently operates two ethylene production units: the Ukishima North Area unit, which began operations in 1971 and has a production capacity of 540,000 tons per year, and the Ukishima South Area/Kawasaki Area unit, which started in 1970 and has a capacity of 448,000 tons per year.


#eneos #steamcracker #ethyleneplant #naphthacracker #kawasaki #refinery #plantclosure

Ethylene Production Optimization in the Chiba Area scheduled for completion in fiscal year 2026.

April 1, 2025

Sumitomo Chemical Co., Ltd. and Maruzen Petrochemical Co., Ltd. (a subsidiary of Cosmo Energy Holdings Co., Ltd.) have announced a significant change to their ethylene production operations in the Chiba area. Maruzen Petrochemical will shut down its own ethylene production facilities by fiscal 2026, and all ethylene production will be consolidated at Keiyo Ethylene Co., Ltd. Keiyo Ethylene is a joint venture between Maruzen Petrochemical, which holds a 55% ownership stake, and Sumitomo Chemical, which holds 45%. The shareholding ratio will remain the same after the consolidation.

This move comes in response to several challenges facing the industry, including a global oversupply of ethylene due to new, large-scale plants in China, as well as declining domestic demand for ethylene in Japan. Both companies recognize the need to improve operating rates, lower costs, and reduce CO₂ emissions to remain competitive.

By consolidating production at Keiyo Ethylene, which is Japan’s most advanced and largest ethylene facility, Sumitomo Chemical and Maruzen Petrochemical aim to increase the operating rate and competitiveness of the Chiba petrochemical complex. The consolidation is also expected to lower fixed costs and advance green transformation initiatives, supporting the companies’ efforts to achieve net zero carbon emissions.

The Maruzen Chiba Plant, operated by Maruzen Petrochemical since April 1969, currently has a capacity of 525,000 tons per year (or 480,000 tons during repair years). Keiyo Ethylene, which began operations in December 1994, has a capacity of 768,000 tons per year (or 690,000 tons during repair years). The optimization and consolidation of ethylene production are targeted for completion by fiscal year 2026.

Overall, this consolidation is designed to ensure the long-term competitiveness and sustainability of the Chiba petrochemical complex by focusing production at the most efficient site and supporting environmental goals.


#sumitomo #maruzen #chemicals #ethylene #chiba #japan #consolidation #keiyo #cracker #steamcracker #ethyleneplant #plantclosure

TotalEnergies Manufacturing Site at the port of Antwerpen ©Belga

TotalEnergies closes one of its two steam crackers in Antwerp, 253 jobs disappear "without layoffs"

Antwerpen, 22 April 2025 -- TotalEnergies will close one of its two steam crackers in the port of Antwerp, a decision that will impact more than 250 jobs. No forced layoffs will be announced, according to the energy group.

By 2028, the chemical cluster in the port of Antwerp will lose one of its three steam crackers. TotalEnergies has chosen to shut down its oldest Naphtha Cracker (NC2). The reason is a concerning overcapacity in the petrochemical market. Although 253 positions are affected by this closure, management seeks to reassure: no forced departures are on the horizon.

“We assure every employee of the affected steam cracker that they will be able to continue their activity at our Antwerp site,” says Ann Veraverbeke, CEO, in an interview with Gazet van Antwerpen. “This transition is possible because, by early 2028, 270 of our employees in Antwerp will reach the legal retirement age. The 253 employees from the old steam cracker will be essential to fill this wave of departures.”

Ethylene overcapacity

NC2, a petrochemical facility that transforms hydrocarbons into basic molecules used in the chemical industry, was “historically dependent” on a contract with a user of the ethylene produced, who did not wish to renew this contract, the French oil and gas group specified.

The facility “will no longer have outlets for its ethylene production” and TotalEnergies will “focus on its newest steam cracker (NC3), whose ethylene production is entirely consumed by TotalEnergies’ units in Antwerp and Feluy,” it added.

2017 Revamp of Naphtha Cracker 3

As part of a project to upgrade its refining and chemicals platform in Antwerp, TotalEnergies had started up a new ethylene cracker that runs on ethane feedstock in July 2017, investing nearly $60 million to revamp its Naphtha Cracker 3 to run on the light feed and the adaption of the site’s terminal to enable the import of 200,000 t of ethane per year by ship from Norway. The revamp was done to optimize supply by providing flexibility for the cracker to use either ethane, butane or naphtha as feedstock, so that advantaged feedstock could therefore account for more than 50% total input.

#totalenergies #antwerp #belgium #petrochemicals #steamcracker #naphthacracker #plantclosure #ethylene

Rotterdam, Netherlands, 11 Feb 2025 - Chemical manufacturing giant LyondellBasell has announced plans to shut down its propylene oxide (PO) and styrene monomer (SM) production facility at Maasvlakte in the Rotterdam port area. The closure marks a significant shift in the company's European operations and will impact the regional petrochemical landscape.

According to company officials, the decision comes after a comprehensive strategic review of LyondellBasell's global asset portfolio, with the Maasvlakte plant deemed no longer economically viable in the current market environment. The facility, which has been operational since the early 2000s, has faced increasing pressure from newer, more efficient production sites in Asia and the Middle East.

Industry analysts point to several factors contributing to the closure, including high European energy costs, increasing global competition, and shifting market demands. The company will reportedly maintain its other Dutch operations, including facilities in Rotterdam's Botlek area.

Propylene oxide and styrene monomer are key ingredients used in the production of polyurethanes, plastics, and synthetic rubbers found in numerous consumer and industrial products. Market observers suggest that LyondellBasell will likely meet European demand for these products through its remaining facilities and strategic supply agreements.

The plant is expected to complete a phased shutdown by the end of the year, following appropriate decommissioning procedures and environmental protocols.

#posm #smpo #lyondelbasell #propyleneoxide #styrene #dutchplant #thenetherlands #plantclosure