Dow and Celanese Retreat: European and Korean Cutbacks as China Expands

In early June, two international chemical giants announced strategic pullbacks.

Dow Chemical plans to cut 605 jobs in the Netherlands. Dow operates three sites in the country: Terneuzen, Delfzijl, and Dordrecht. Terneuzen is Dow’s largest manufacturing site outside the U.S., with 16 plants and about 3,200 employees producing roughly 800 types of plastics, chemicals, and industrial raw materials. Delfzijl is one of the world’s largest isocyanate production bases, specializing in MDI distillation. Dordrecht produces specialty plastics for medical and food industries, such as Surlyn®, Bynel®, and Fusabond®.

The layoffs are part of Dow’s “Transform to Outperform” efficiency program. In January 2026, Dow announced this restructuring plan aiming to deliver at least $2 billion in operating profit growth in the short term and cut 4,500 jobs globally (about 13% of its workforce).

The immediate driver is losses. Dow posted a net loss of over $2.4 billion for full-year 2025, and in Q1 2026, net sales were $9.794 billion (down 6% year-on-year) with a net loss of $445 million. Europe’s chemical industry faces high energy prices, strict regulations, and competition from outside Europe.

Interestingly, in the same month as the Dutch layoffs, Dow continues capacity expansion in China. Dow Silicones (Zhangjiagang) Co., Ltd. broke ground on a 2,500-ton-per-year silicone polymer batch line expansion. The Zhangjiagang site already has 120,000 t/y of glycol ethers, 120,000 t/y of polyether polyols, 210,000 t/y of siloxane and fumed silica, a world-class gas-phase polyethylene catalyst plant, and complex downstream silicone product lines.

Celanese announced on June 4 that it will close its engineering plastics compounding plant in Ulsan, South Korea, with immediate cessation of all manufacturing and production operations. The Ulsan plant’s capacity will be transferred to Celanese facilities in Nanjing, Shenzhen (China), and Silvassa (India). Celanese products include PET, PA, PBT, and HTN (high-temperature nylon), which are critical for automotive, electronics, and electrical industries.

Celanese stated that Asia holds enormous growth opportunities, and building capacity close to customers is key to meeting demand.

Over the past few years, Celanese has taken several similar contraction measures. In May 2026, it announced adjustments to its nylon business, closing the Sakra plant in Singapore and optimizing nylon 66 polymerization facilities in Richmond, Virginia, and Washington, West Virginia. In February 2026, it completed the sale of the Micromax® business for about $500 million. In October 2025, it planned to close the acetate tow plant in Lanaken, Belgium, affecting about 160 employees. In August 2025, it announced exits from the Elotex® redispersible powder plant in Sempach, Switzerland, and the Vamac® plant in Sarnia, Canada.

Not only Dow and Celanese, but also BASF, Covestro, and ExxonMobil have been closing old capacity in Europe, Japan, and South Korea while expanding new capacity in China. But look closely: what they are investing in China is not ethylene or propylene—China already has excess commodity chemicals. Dow is expanding silicone polymers in Zhangjiagang; Celanese is transferring engineering plastics compounding to Nanjing and Shenzhen; Covestro is expanding TDI in Shanghai and building TPU facilities in Zhuhai. These are all specialty materials, tied closely to new energy and electronics downstream.

The race for upstream commodity chemical capacity is largely over, as local Chinese players have driven costs very low. What foreign firms are now adding are segments where domestic companies have not yet fully caught up—areas with high technological barriers, long certification cycles, and strong customer stickiness.

Now look at the capacity being shut down. Terneuzen in the Netherlands is not technologically inferior, but Europe’s energy and carbon prices make it unprofitable. The Ulsan compounding plant in Korea was not poorly run, but costs in Nanjing and Shenzhen are lower and customers closer. In the coming years, products like PBT, PET, and PA compounds—unless they are highly specialized or carry extremely demanding certifications—will continue to move from Europe, Japan, and Korea to China and Southeast Asia.

For domestic Chinese companies making general-purpose modified plastics, they will soon face direct competition from Celanese, BASF, and Covestro. For those with similar production lines in Europe or Korea, it’s time to calculate how many more years they can hold on. For those exporting to Europe, Dow’s losses are a warning: carbon prices and energy costs will continue to weed out high-cost regions.