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Petrochemical Industry Downsizing, Shutdowns, and Efficiency Trends
February 28, 2025
The global petrochemical industry is undergoing a seismic shift as companies close outdated facilities, reduce their workforces, and make strategic investments to make operations more efficient. This transformation is driven by evolving market dynamics, a push for sustainability, and improving plant cost economics.
One of the most significant recent shutdowns is LyondellBasell's decision to permanently close a Houston refinery, which had a capacity of 264k barrels per day. The move resulted in the layoff of 345 workers, accounting for 86% of the site's workforce. The company cited a strategic shift away from refining operations as the primary reason for the closure, reflecting a broader industry trend as companies are pivoting toward cleaner energy and higher value petrochemicals.
Dow announced a 5% global workforce reduction in January 2023, when the company revealed plans to cut 2,000 jobs, representing approximately 5% of its workforce, as part of a $1 billion cost saving initiative. A few weeks later, Dow announced an additional reduction of 1,500 jobs worldwide to address ongoing economic challenges. Chevron also announced plans to reduce personnel by 15% to 20% by the end of 2026, aiming to simplify its organizational structure and enhance competitiveness.
Meanwhile, in China, PetroChina is preparing to shut down its largest oil refinery in the northern region, marking a major milestone as the country phases out aging and less efficient plants. This move aligns with Beijing's broader push to modernize its industrial base and improve environmental sustainability.
Even as companies shutter older plants, they are pouring billions into new projects designed to improve efficiency and profitability. ExxonMobil has launched a $10 billion investment for a new petrochemical complex in Huizhou, China, featuring a 1.6 million tons/year steam cracker that can process both Naphtha and Liquefied Petroleum Gas (LPG). The facility recently began test operations and is expected to be fully operational by mid year.
In Latin America, Mexico is ramping up investments in state-run oil company Pemex to enhance domestic production of Polyethylene and Ethylene Oxide, thereby reducing reliance on imports. Additionally, Braskem-Idesa's long awaited Ethane import terminal in Mexico is expected to be completed later this year, finally allowing the company to achieve full production capacity after years of struggling with insufficient Ethane feedstocks from Pemex.
Meanwhile, Pemex's own older polymer plants constantly face operational challenges, further underscoring the importance of operational investments and diversifying feedstock sources to stabilize production in the country. Brazil's Braskem also announced shifting towards greater use of domestically sourced Ethane over Naphtha, a strategy aimed at lowering costs and boosting competitiveness in the global market.
Regional government carbon tax policies, high energy costs, and lack of support for the petrochemical industry are driving the industry out of Europe, prompting major competitors to shutdown facilities due to repeated regulatory inaction. European companies are assessing their assets amid inefficiencies, shifting demand, trade flows, and regulatory pressures. As a result, Europe will become increasingly dependent on imports from the US, Middle East, and China, benefiting exporters from other regions significantly. LyondellBasell European operations are under review as a process that could lead to further plant closures while the company seeks to streamline its footprint and focus on high-margin products.
Several European polymer and monomer plants have already shut down due to high Naphtha costs in the region, while aging infrastructure is making operations economically unviable. Notably, BASF has closed its Toluene Diisocyanate (TDI) plant in Ludwigshafen, Germany, and Dow has ceased operations at its Ethylene cracker in the Netherlands. These closures reflect broader industry struggles as companies seek sustainable alternatives that also are more cost competitive.
These developments underscore a clear industry wide trend of the gradual retirement of older, higher cost Naphtha based plants in favor of more efficient and flexible facilities that can process a variety of more competitive feedstocks. Petrochemical companies continue to adapt to the dynamic landscape as the sector is positioning itself for a future balancing profitability with sustainability, marking a new era of industrial evolution for petrochemicals.
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