Cologne: The US chemical company Westlake is closing its PVC plant in Cologne in the first quarter of 2027. Around 120 jobs are set to be cut as the company eliminates an annual capacity of approximately 165,000 tonnes of PVC. Westlake cites weak demand, high energy costs, and growing import pressure from Asia as reasons. In addition, the site’s small size and higher logistics costs make operations more expensive; consequently, Westlake is shifting production volumes to more cost-effective German plants.
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PVC plant in Cologne faces higher costs than other sites
The company decided to shut down the facility on September 24 and informed the workforce five days later. At the same time, Westlake began consultations with the local works council. According to the company, the PVC plant in Cologne incurs higher costs than other European PVC sites. Consequently, Westlake plans to redistribute current production volumes to other plants in the future.
The shutdown is expected to cost Westlake approximately $205 million before taxes. Of this amount, roughly $100 million relates to cash costs, while $105 million represents non-cash charges. Westlake estimates severance and separation costs at around $20 million. Another $80 million is allocated for contract terminations, decommissioning, and other shutdown-related expenses. In addition, the company intends to book approximately $110 million of the total charge in 2026.
Wilhelmshaven becomes a more cost-effective hub
The strategy becomes particularly evident when looking at Wilhelmshaven. On June 15, 2026, Westlake acquired a PVC and VCM plant there out of insolvency proceedings. The site has an annual production capacity of around 380,000 tonnes of PVC and also boasts a deep-water port. Consequently, the group sees advantages there regarding raw material supply and logistics.
Westlake intends to continue supplying its customers from other German plants. Thus, the closure does not represent a withdrawal from the German PVC business, but rather a shift within its own production network. The PVC plant in Cologne loses out in this internal cost comparison primarily due to factors of scale and logistics. At the same time, Westlake is concentrating more capacity at sites offering more favorable production conditions.
Chemical industry currently benefiting only from one-off effects
Although the German chemical industry reports improved sentiment, the economic recovery remains fragile. The Ifo industry index rose to 5.5 points in September, up from minus 2.6 points in August. Supply issues faced by Asian and Middle Eastern suppliers aided European producers as customers restocked their inventories. However, Ifo characterizes these impulses as temporary. The VCI also points to weak order intake and structural cost disadvantages at German sites.
Westlake also expects weaker results for the third quarter compared to the second. In North America, average prices for PVC and polyethylene fell relative to the previous quarter. Additionally, higher diesel prices increased transport costs, while weaker construction activity dampened sales volumes in the infrastructure business. The planned shutdown in Cologne is therefore part of a broader cost-rationalization effort by the group rather than an isolated local decision.
Author: Blackout News
Sources: Reuters (02.10.26) – Westlake (29.09.26) – VCI (30.09.26)