Markus Steilemann, chief executive of Covestro, warned that the EU faces a critical choice: strategically subsidize key industries or watch energy-intensive sectors flee to more competitive regions. His comments came as the German chemicals group unveiled plans to invest up to €4bn across new facilities in China and the UAE.

European chemical companies have been hemorrhaging market share amid record energy costs and complex environmental regulations. Production fell 3.2% in the first quarter year-over-year, while exports plunged 12.4%, according to Cefic data. Cheap Chinese imports have flooded the market, prompting a record number of anti-dumping complaints to the European Commission.

Steilemann framed the Shanghai MDI facility investment as a business decision driven by growth prospects, not politics. The construction market in Europe simply lacks the scale to justify large-scale production, he argued. High energy costs have rendered European chemicals uncompetitive globally, forcing companies to seek alternatives.

The executive advocates shifting European chemical production away from energy-intensive manufacturing toward high-value innovation, leveraging Germany's research capabilities. This strategic pivot represents the industry's best path forward amid mounting competitive pressures.