The Illusion of Protection: Why Europe Needs More Than ADDs to Compete

THE EUROPEAN CHEMICALS industry is at a crossroads resulting from high energy and feedstock costs. and ever-more pressure from competitive imports of chemicals and manufactured goods. Here’s a personal view of the way forward for Europe. Let’s discuss.

Antidumping Duties: Tactical Relief, not a Strategy

ANTIDUMPING DUTIES (ADDs), classical “old world” measures, are becoming Europe’s default response to Chinese oversupply – just as global steel producers push for a more coordinated, strategic defence.

Taken together, a recent ICIS article on European chemicals ADDs and an FT article on the steel industry point to an uncomfortable conclusion for Western chemical producers: Case-by-case ADDs are blunt, leaky and temporary tools in a world of structural overcapacity and Chinese self-sufficiency. They are operational and tactical, not long-term strategic measures.

Europe risks a slow hollowing-out of manufacturing as it focuses on green regulations without what seems to be a joined-up industrial strategy. Steel shows that coordinated, cross-border action is possible – but getting there is slow and politically fraught. It is dangerous to assume governments can fix overcapacity.

From a Western company perspective, the message is clear: Trade defence can buy time at the margin, but it is not a strategy. The real way forward lies in portfolio choices, cost and carbon competitiveness, taking advantage of more competitive imports versus local production in some value chains, and pushing governments towards coherent policies.

What the Chemicals ADD Story Really Tells Us

Across MEG, melamine, TiO₂, epoxy resins, PVC, PET, PTA, ABS, adipic acid and BDO, the same patterns repeat:

• ADDs shift trade flows, not competitiveness
  Duties often become manageable surcharges. Low-cost exporters re-optimise and carry on. In PVC, for example, very high duties on Egypt and the US made those flows largely unworkable. The prize went not to European producers, but to South Korean and Mexican suppliers who filled the gap.
• Exempt countries arbitrage the system
  Plug one gap, another opens. Imports reallocate to the next-cheapest origin. In epoxy resins, as soon as ADDs were signalled for China, Taiwan and Thailand, imports from those origins dropped – but South Korea, which was exempt, stepped in and gained share. Overall imports stayed historically high.
• Investigations trigger import surges
  Buyers and sellers rush volumes before duties apply, pulling forward imports without changing long-term dynamics. This applied to adipic acid and BDO where imports surged ahead of duties. Retroactive duties are possible in theory, but hard to apply cleanly in practice.
• Whack-a-mole effect
  Product- and origin-specific duties manage symptoms, not the disease of global oversupply. Duties on Chinese PET cut Chinese shipments – only for imports from Vietnam to rise, triggering a second investigation. PTA imports from South Korea and Mexico have surged with Europe turning into a net importer.

Lesson: Cost position beats paperwork. ADDs rarely restore operating rates or margins in a structural glut.

Steel: A Glimpse of Coordinated Action

Steel faces similar structural drivers: Massive Chinese capacity supported by Chinese government subsidies that have led to global oversupply. By 2027, global steel capacity could exceed demand by 40%. Western governments are exploring coordinated defence through OECD forums and proposing tariffs as national security measures. But politics remain messy, and decisive action is uncertain.

The threat seems just as dramatic in chemicals.

Europe’s Additional Vulnerabilities

Europe faces a squeeze:

• High structural energy and feedstock costs versus the US and Middle East.
• Layered green regulations (ETS, CBAM, targets, plastics recycling and REACH) raising compliance costs without sometimes equivalent standards on imports, according to industry sources.
• No coherent manufacturing strategy, only fragmented subsidies and emergency measures, again according to industry sources.

ADDs create the illusion of protection while the broader manufacturing base erodes.

Lessons for Western Chemical Companies

1. Don’t mistake ADDs for a business model
   They can buy time but do not restore competitiveness. Plans built on permanent tariff walls are fragile.
2. Assume China remains a price-setter
   China is moving from net importer to balanced or net exporter in more chains, including higher-value products. Its volumes and pricing will likely shape global benchmarks for years.
3. Be deliberate about what you keep in Europe
   Focus on strategic value chains that tick the supply security, technology advantage circularity boxes. Exit unwinnable commodity chains. Double down on defensible propositions: Reliability of supply, complex formulations and local circular solutions.
4. Push for policy that matches ambition with realism
   Chemicals need integrated industrial and climate policy: Clear carbon pricing, a CBAM that’s designed in the right way, incentives for low-carbon feedstock and faster permitting for investments in decarbonisation of chemical plants and green energy etc.

What’s the Way Forward?

Don’t treat protectionism as a shield for yesterday’s assets. Start treating it as one variable in a broader strategy to reinvent Western chemicals for a world of Chinese overcapacity and climate-driven transformation.

Practically:

• Accept the new baseline: China is structurally self-sufficient and export competitive.
• Use ADDs tactically: File cases where they buy time to restructure, not as a cure-all.
• Rationalise: Focus on strategic, higher-value or circular segments.
• Invest where structurally advantaged: Leverage low-cost regions for some imports.
• Push for more coherent policy in manufacturing and energy.

Events in steel are a warning and a template. If European chemicals wait for rescue, they will be disappointed. If they accept long-term structural overcapacity, push for smarter policies and reshape portfolios, they can write the next chapter rather than be written out of it.

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