— By Plasteurope.com staff — 

Europe’s polymer industry closed 2025 under heavy strain, as oversupply and subdued demand gave way to early signs of structural contraction. Across major value chains, producers faced sustained margin pressure and were forced to reassess how and where they produce. Martin Bäcker, head of the Plasteurope.com Price Team, looks back at the key developments of the year and outlines why the outlook for 2026 remains challenging.

When asked which materials stood out in 2025, Bäcker pointed to PET and styrenics as the most affected. “European PE and PP have remained under pressure from global oversupply and imports,” he noted. “But the PTA/PET chain and styrenics have been particularly challenged this year, with persistent declines and shrinking margins reflecting both fundamental demand erosion and underlying market issues.”

One of the most significant shifts occurred in the PTA/PET chain. Domestic PTA production has all but disappeared in Europe, with the market now supplied largely by imports, Bäcker said. This has eased the feedstock cost pressure that European PET converters faced in recent years, allowing them to source PTA more cheaply. As a result, European PET producers have been able to regain market share – but not profitability. “Producers have the volume again, but they are not earning money,” Bäcker noted.

Related: PET November: Market still at rock bottom

These pressures triggered what many market participants had expected for months: the first large-scale shutdown linked directly to Europe’s deteriorating cost position. Bäcker noted that in November this year, PlastiVerd announced the permanent closure of its PET production facility in El Prat de Llobregat, Spain, and its intention to sell the site. The company said the plant is no longer profitable. This removes around 200,000 t/y of PET capacity from the European market and underscores the difficulties faced by high-cost producers, the pricing expert added.

Imports, meanwhile, were not consistently disruptive towards the end of the year. Port strikes in Europe pushed some offered prices slightly higher, temporarily limiting the usual pressure from overseas material.

With European PTA capacity either idled or uncompetitive, 2026 is likely to bring further run-rate reductions, extended shutdowns, and potentially additional plant closures. Larger global groups with sites outside Europe are increasingly expected to supply the European market from abroad. Higher import tariffs have done little to alter this trajectory. In PET, these dynamics are encouraging new capacity development globally, while older, less efficient European plants face an increasing risk of permanent shutdown.

A second major trend reinforcing this pressure emerged from regulatory developments. In January 2025, the EU’s 25% recycled-content mandate for PET bottles came into force, but most converters were prepared for the directive well in advance. Some even reached 50% or 100% PCR content during the year, before later reducing them to around 30% as recycled material remained significantly more expensive than virgin PET.

As a result, the mandate ultimately lent support to virgin PET demand rather than displacing it, Bäcker said.

Related: Polypropylene November: Propylene contract drags down prices for polymer

The PET market as a whole, however, contracted. According to Bäcker, there was no summer peak, margins largely disappeared, and prices approached levels at which European production no longer makes economic sense. “If values fall further, the incentive to maintain domestic PET capacity could vanish,” he said.

Beyond regulation, consumer behaviour also weighed on demand. As household budgets tightened, families increasingly opted for larger bottles of water instead of multiple single-serve formats, and food packaging consumption dropped as consumers followed the trend from last year and prepared more meals at home. At the same time, continued lightweighting reduced resin usage: bottles became thinner yet remained sufficiently robust, eroding underlying PET consumption even where unit sales were stable.

While PET’s difficulties dominated headlines, the styrenics chain experienced its own prolonged decline. November 2025 marked the eighth consecutive monthly drop, pushing prices to their lowest level since early 2021. According to Bäcker, declining feedstock costs – including another fall in the styrene reference – and chronically weak demand continued to drive prices lower.

A tentative turning point may emerge in December, he noted, as the styrene reference firmed slightly for the first time in months. Some PS and EPS suppliers attempted to pass through small cost increases, but low order volumes may force several producers – particularly in ABS – to hold prices steady, especially as composite costs rose only marginally and low-cost imports remain available.

Related: German construction industry stuck in valley of tears

The core problem remains stagnant demand, though, Bäcker noted. In several countries, products containing styrene have been restricted or banned, limiting potential growth. The construction sector – a major consumer via insulation materials – delivered no support whatsoever. “There was absolutely nothing happening,” Bäcker said. “A few bridge renovations don’t change anything. What we need is affordable housing.”

Housing shortages, high financing costs, and cautious investment continue to suppress construction activity across the continent. Developers are building only what can be sold quickly rather than what is most needed, and policymaking has failed to accelerate new projects. Rising CO₂ costs and a lack of targeted incentives for landlords to upgrade energy efficiency have further slowed momentum. With housing policy paralysed, the construction industry is expected to remain weak well into 2026, providing little relief for styrenics, Bäcker predicts.

Subdued conditions also defined Europe’s largest commodity polymer markets. Global oversupply of polyethylene and polypropylene persisted throughout 2025, leaving Europe exposed to competitive imports and muted domestic demand. While no clear recovery signals emerged, some market participants suggested operating rates and inventory levels were approaching a tentative floor. Nevertheless, the scale of global capacity expansions – particularly in the US and the Middle East – continues to cap any meaningful price recovery in the near term.

Recyclate pricing continued to follow a path distinct from virgin materials, despite periodic alignment. Price spreads fluctuated throughout the year as rPET and rPE maintained their own cost structures and supply constraints. The recycled-content mandate influenced demand, but volatility remained driven more by collection rates, processing costs, and the availability of suitable-quality material than by the virgin market.

Across key end markets – packaging, automotive, and construction – demand remained soft. Packaging proved more resilient than construction but still suffered from consumer caution, Bäcker said. Automotive, while more stable, did not provide a decisive upswing. Construction was once again the weakest performer, with no indications of a turnaround despite growing political recognition of Europe’s housing shortage. Some governments have introduced targeted support measures, but these have yet to materialise into significant activity.

Related: Consolidation remains a possibility in the European PVC market

Is there any sector showing clear positive movement? According to Bäcker, only defence manufacturing has registered strong growth, but this has little bearing on plastics demand. Other isolated bright spots, such as grid infrastructure projects or municipal LED conversions, remain too small to offset broader weakness.

Looking into 2026, the indicators offer little cause for optimism. Further PTA and PET closures appear increasingly probable, and prolonged shutdowns may become the norm. The pricing expert expects conditions to worsen before they improve, largely because the high-cost European production base continues to struggle against both global competition and sluggish domestic demand.

According to Bäcker, key variables to watch early in 2026 include construction activity, energy and CO₂ costs, import flows, and any policy measures aimed at housing or industrial competitiveness. Without meaningful improvement in these areas, Europe’s polymer markets are likely to carry the difficulties of 2025 into the new year, he concluded.

Year-Enders 2025: With the year on its way out, Plasteurope.com is taking stock of the European plastics industry and related sectors. From the impact of US tariffs and the state of the European economy to polymer price trends and the recycling, energy, and gas markets, we’re bringing you an analysis of the year that was, with hints of what you can expect in 2026. Our goal, simple as always, is to help you make better business decisions with a clearer understanding of the trends, challenges, and transformations in the industry, with insights from expert voices in each sector concerned.