Europe chemicals downturn likely to spur more mergers, Lanxess CEO says

By Ozan Ergenay

Nov 5 (Reuters) - Europe's chemicals industry is facing the most severe downturn in decades, with weak demand, high energy costs and mounting regulation likely to spur further mergers across the sector, Lanxess LXSG.DE CEO Matthias Zachert said on Thursday.

Speaking after the German speciality chemicals maker's third-quarter results, Zachert described conditions facing European manufacturers as the worst he had experienced during his career in the industry.

Zachert told reporters that BASF's BASFn.DE takeover approach toward Evonik EVKn.DE was a logical consequence of the challenging market environment.

"It comes as no surprise to me that consolidation is progressing," he said.

The chemicals sector continues to struggle with subdued demand from key customer industries including construction, agriculture and automotive, while higher energy prices have raised production costs and eroded competitiveness.

European companies also face a growing regulatory burden, Zachert said, citing emissions trading rules, new packaging requirements and industrial emissions regulations.

"Europe needs to understand what competitiveness actually means," he said, warning that additional regulation risked putting further pressure on European producers.

Zachert said chemical production capacity in Europe had been cut by about 10%, a scale of retrenchment not seen in many years.

He added the German company's priority was to steer the business through the crisis with cost-cutting measures and strict spending discipline.

Lanxess had launched new cost-cutting measures for 2026 in March, announcing 550 job cuts, most of them in Germany.