Europe's ethylene oxide (EO) market is heading into 2026 with supply outstripping demand. Producers are shifting towards merchant sales rather than captive use for commoditised derivatives.
Downstream derivatives such as ethylene glycols and ethanolamines remain under pressure from imports and weak regional demand. Suppliers are chasing purified EO sales, which offer better returns and face little competition from overseas players. EO's hazardous nature makes it difficult to transport, keeping supply local and largely tied to long-term contracts.
Merchant EO demand in Europe is flat at best. This is increasing competition for volumes among producers and putting pressure on "adders" in formula-based contracts for next year. Surfactants, which account for most merchant EO consumption, have held up better than other downstream sectors, supported by steady demand from personal care, household and industrial cleaning applications. But polyether polyols remain exposed to sluggish construction and automotive markets, while cautious consumer confidence is curbing demand for durable goods. Both sectors also face pressure from competitively priced imports, further weighing on domestic margins.
Despite the challenging market environment, EO-related capacity rationalisation has been limited in Europe this year. Clariant confirmed in September that it will decommission one of its two EO units at Gendorf, Germany, by the end of the year. But the closure is not expected to tighten merchant EO availability, as the unit is linked to ethylene glycols production rather than purified EO, market participants said. Ineos is investing €250mn to modernise its steam cracker at Lavera, France — a site previously viewed as vulnerable — signalling confidence in the long-term viability of the complex, including EO and derivatives operations.
European EO producers' resilience could be tested in 2026. The European Commission has proposed eliminating customs duties on a wide range of US industrial goods under the EU-US trade deal, a move broadly supported by EU member states. The proposal still needs European Parliament approval, but if implemented it could weigh on domestic producers' profitability. EU countries added a bilateral safeguard mechanism to the draft law, to be activated if significant import increases and serious injury to domestic producers follow tariff concessions. The US is a major supplier of EO derivatives, including ethylene glycols, ethanolamines and E-series glycol ethers to the EU, and zero tariffs could open up arbitrage opportunities for spot imports more frequently.
Monoethylene glycol will remain somewhat protected from an influx of imports by existing anti-dumping duties on US and Saudi material, effective until 16 November 2026. European producers are preparing for a sunset review of the measures, and any changes could quickly reshape the competitive landscape. Market participants are also watching the impact of other anti-dumping investigations in the polyethylene terephthalate (PET) value chain — probes into PET imports from Vietnam, with pre-disclosure expected on 24 December, and into purified terephthalic acid (PTA) imports from South Korea and Mexico due to be finalised in 2026.
The commission imposed definitive anti-dumping duties on Chinese PET imports in April 2024, but this has done little to stem the flow of low-cost imports into Europe, with trade shifting to other origins instead. Protectionist measures offer temporary relief but do not address Europe's structural disadvantages — high energy costs and carbon reduction obligations. European MEG demand is shrinking because of ongoing downstream closures, with a Dutch facility permanently closed in 2024 and a Spanish producer ceasing output in 2025 amid high regional production costs and pressure from imports. Further PET capacity shutdowns are anticipated next year if challenging market conditions persist.
