Is the future of Europe's chemical industry bleak?

◼ CEO & CFO Comments: ➢ “In the Americas, we built an ethylene plant in Pennsylvania at a cost of $14 billion in 2022, and we are seeking opportunities for strategic partnerships.” ➢ “Now look at Europe—you’ll find it to be an extremely challenging market. Our priority is ensuring we remain the most competitive player here, and we’re doing quite well on that front. Then we must decide whether to stay—either independently or with partners—or exit entirely.” ➢ “Our business in China is essentially localized: locally financed, locally constructed, and jointly marketed with capable local manufacturing partners—this model fits very well.” Shell’s three integrated sites in Europe collectively possess 2.05 million tonnes/year of ethylene capacity, accounting for 8.4% of Europe’s total ethylene capacity (~24.45 million tonnes) in 2024; 0.92 million tonnes/year of propylene capacity (5.1%); 0.38 million tonnes/year of ethylene oxide (EO) capacity (12.9%); 0.2 million tonnes/year of propylene oxide (PO) capacity (7.4%); and 0.45 million tonnes/year of styrene monomer (SM) capacity (9.3%). Additionally, Shell holds 1.25 million tonnes/year of benzene capacity (13% of Europe’s total benzene capacity of 9.35 million tonnes), 0.38 million tonnes/year of toluene capacity (14%), and ~0.16 million tonnes/year of paraxylene (PX) capacity (7%). These assets not only carry significant regional weight in terms of scale but also hold systemic importance for the stability of Europe’s chemical ecosystem due to their highly interconnected upstream–downstream integration. ◼ Chain-reaction impact of Shell’s withdrawal • Shell’s European facilities typically feature fully integrated downstream chains extending from ethylene to EO/PO/MEG/SM. Once an ethylene unit shuts down, it triggers not only direct olefin supply shortages but also systemic disruptions across derivative oxides, polymers, aromatics, and their downstream products. For example, Shell’s Moerdijk site accounts for 13% of Europe’s EO supply—a segment already characterized by high carbon intensity, low margins, and fragmented capacity. Losing this major supply source would likely cause price volatility and higher import costs for downstream products such as polyethers, surfactants, polyethylene glycol (PEG), and ethanolamines. • Shell’s position in the aromatic chain is especially prominent. Its Wesseling facility in Germany features 1.25 million tonnes/year of benzene extraction and 0.38 million tonnes/year of toluene extraction capacity—key nodes in Western Europe’s aromatic feedstock market. Benzene serves as the precursor for high-end materials including styrene monomer (SM), phenol, caprolactam, TDI, and MDI. Withdrawal of such facilities would inevitably accelerate structural shortages of aromatic-based products across Europe. ◼ Early signs of cascading effects from small-scale units • Europe currently hosts numerous “small-scale steam crackers” with ethylene capacity below 0.5 million tonnes/year. Their combined capacity totals 8.5 million tonnes/year—approximately 35% of Europe’s total ethylene capacity. Similarly, propylene units with capacity under 0.3 million tonnes/year collectively produce 12 million tonnes/year—66% of Europe’s total propylene capacity (~18 million tonnes). Most of these units were built in the 1980s–1990s, rely primarily on naphtha feedstocks, suffer from high specific energy consumption and heavy CO₂ emissions, and lack efficient downstream integration—rendering many unprofitable or operating at persistently low utilization rates. • Representative operators include Versalis (Italy), OMV (Austria), MIRO (Germany), and Repsol (Spain). Their individual ethylene units typically range between 0.3–0.45 million tonnes/year, while their propylene production mostly stems from cracking by-products or FCC processes.

What are the development trends in the alkanolamine industry, and what should investors watch for?

Alkanolamines refer to organic compounds containing both nitrogen atoms and hydroxyl (–OH) groups, thereby exhibiting chemical properties characteristic of both amines and alcohols. Currently, the main types of alkanolamines include monoethanolamine (MEA), diethanolamine (DEA), triethanolamine (TEA), and isopropanolamines. They are widely used in cement additives, surfactants, coatings, and other fields. Cement grinding aids derived from alkanolamines effectively reduce cement particle size, lower electricity consumption during grinding, and enhance cement strength. Although China’s cement industry has seen an overall output decline in recent years due to macroeconomic headwinds, the adoption rate of cement additives continues to rise—creating new growth opportunities for the alkanolamine industry. In 2022, China’s production and consumption of cement additives totaled 1.0072 million tonnes and 1.0061 million tonnes, respectively. This excerpt is taken from the report “China Alkanolamine Industry Status and Outlook 2023 (with Industrial Chain, Production Volume, Consumption Volume, and Key Enterprises)” published by Hua Jing Industry Research Institute. For full access, visit Hua Jing Intelligence Network and search for the report. From an industrial chain perspective: The upstream segment comprises raw material suppliers—including ethylene oxide (EO), propylene oxide (PO), and other feedstocks; the midstream consists of alkanolamine producers, whose synthesis methods include diazotization–reduction, amine–anhydride reactions, and reactions of chloroalkanes with ammonia; and the downstream applications span cement additives, surfactants, coatings, daily chemicals, and more. As a key organic chemical raw material, alkanolamines serve diverse end markets. In 2022, cement additives represented the largest application segment in China’s alkanolamine market, accounting for 56%; surfactants and coatings ranked second and third, contributing 11% and 10%, respectively. To help enterprises, research institutions, and investment firms better understand industry dynamics and future trends, Hua Jing Industry Research Institute has launched the report “China Alkanolamine Industry Market Deep-Dive Analysis and Investment Potential Forecast, 2024–2030”. Drawing on years of continuous tracking and research, the institute combines desk research with quantitative surveys and qualitative analysis to comprehensively interpret the current state of the alkanolamine market, its upstream–downstream linkages, competitive landscape, and key players. Using scientifically validated research models, the report conducts multidimensional risk assessments to deliver rigorous, actionable insights. Report Outline: Chapter 1: Overview of the Alkanolamine Industry Section I: Industry Definition A. Definition of the Alkanolamine Industry B. Physical/Chemical Properties of Alkanolamines C. Applications of Alkanolamines D. Key Terminology in the Alkanolamine Industry Section II: Business Model Analysis A. Procurement Model B. Production Model C. Sales Model D. Profit Model Section III: Industry Entry Barriers A. Technological Barriers B. Capital and Equipment Barriers C. Environmental Compliance Barriers Section IV: Profitability Levels Section V: Industry Life Cycle Analysis Section VI: Research Overview A. Research Objectives B. Research Principles C. Research Methodologies D. Research Scope Chapter 2: Global Alkanolamine Industry Analysis Section I: Global Macroeconomic Environment Section II: Review of Global Alkanolamine Industry Performance Section III: Latest Global Industry Developments Section IV: Regional Competitive Landscape

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