Chemicals, Hormuz and Chinese competition: 2026 looks set to be another difficult year
Federchimica forecasts a 3 per cent fall in production, on top of the 13 per cent decline recorded over the 2021–2025 period. President Buzzella said: “The EU’s response has been very weak; this amounts to a surrender of industrial sovereignty.”
Key points
For the chemical industry, the Hormuz crisis and competition from China are taking a heavy toll: Federchimica confirms that the value of production will fall again this year; forecasts currently point to a 3 per cent decline, following a 13 per cent drop in the 2021–2025 period. This is all the more so in the absence of decisive action in Europe.
The instability continues
Over the next five years, almost half of Italy’s chemical companies continue to anticipate a situation of production instability, linked to geopolitical complexities, and over a third – 36 per cent – even foresee a deterioration. Only 15 per cent expect greater stability following the current turbulence. On the other hand, oil prices – with Brent above 90 dollars a barrel and WTI above 85 – offer no glimmer of hope.
The EU’s lacklustre response
Against this backdrop, according to Federchimica’s president, Francesco Buzzella, ‘the EU’s responses have been very weak; the proposed revision of the ETS system has proved unremarkable; little or nothing has changed; and significant corrective measures will be required’. In the meantime, however, companies must continue to grapple with two major challenges, which also emerged in a quick survey of members carried out in July. One concerns the cost of energy and raw materials; the other is competition from China.
The EU’s relinquishment of industrial sovereignty
For an industry such as the chemical sector, “this is a time of very high bills; there is no sign of a way out that would suggest the situation will stabilise in the coming months,” predicts Buzzella. “The Strait of Hormuz has been reopened, but only intermittently; few ships are passing through. It is strategically important for oil and raw materials; just consider that a large proportion of refined products and 30 per cent of urea – one of the components of fertilisers – pass through there. Without Hormuz, the system adapts and routes are re-routed, but the impact is severe, particularly on costs.” The geopolitical situation is highly complex, and at a time when ‘Europe and Italia are relinquishing their industrial sovereignty and becoming tied to the ETS scheme – which drives industry away from Europe – they are becoming increasingly at the mercy of contingencies such as the Strait of Hormuz’. In the EU, according to Buzzella, “there is a great deal of inconsistency: slogans and announcements of support for industry are followed by actions that end up impoverishing it, leading to rapid industrial decline. Italia is a country of great natural beauty and has the potential to develop its tourism sector even further, but let us not forget that it is industry that underpins the European welfare state, and the chemical industry offers wages well above the average.”
The energy issue
Energy costs continue to be the main factor undermining the competitiveness of chemical companies in Italia. Taking into account the dual use of fossil fuels, between 2021 and 2024 the proportion of energy costs relative to the value of chemical production rose from 14 per cent to 18 per cent, and in the absence of a sustained fall in gas and oil prices, this could reach 23 per cent. It cannot be overlooked that energy costs are exacerbated by European climate policies, foremost among them the ETS scheme. Between direct and indirect costs relating to CO₂ emissions, the chemicals sector pays over 600 million euros annually. And between now and 2030, this burden could rise to €1.5 billion. Against this backdrop, it is of strategic importance for European industry to engage in a serious debate on the sustainability of the ETS and the creation of a genuine single energy market.
