Rabobank Warns Cheap Chinese Chemical Imports Could Threaten Dutch Production Capacity

Cheap chemical imports from China may provide Dutch manufacturers with lower input costs in the short term, but growing competition could increase the Netherlands’ exposure to future supply disruptions if domestic production capacity is permanently shut down, according to a recent RaboResearch study.

The warning comes as the Dutch chemical sector has already undergone a significant contraction. Average chemical production volumes during January–May 2026 were around 25% below the level recorded during the same period in 2022. Rabobank, however, emphasized that competition from Chinese imports is only one of several factors behind the decline.

Chinese Competition Expands Across Chemicals and Plastics

Rabobank identified 91 product groups across chemicals, plastics and rubber that showed multiple indicators of rising import competition between 2010 and 2024. China was the primary source of import growth for 16 of these product groups.

PVC floor and wall coverings ranked highest by import value. Other products identified included chemical intermediates such as adipic acid, which is used in nylon production; petroleum resins used in adhesives and rubber; as well as amino acids, imines, lactones and aluminium oxide.

The findings point to a wider evolution in Chinese competition. Between 1995 and 2010, China’s competitive gains were concentrated largely in consumer goods and textiles. Over the past decade, however, competitive pressure has increasingly expanded into industrial and intermediate products.

Dutch Trade Hub Status Considered in Analysis

Because the Netherlands is a major European trading hub, rising Chinese imports do not necessarily indicate that Dutch manufacturers are becoming more dependent on Chinese production. Large volumes enter the country through Dutch ports before being re-exported to other European markets.

Rabobank accounted for this factor in its analysis by comparing import and export volume growth and using net trade relative to total trade to reduce the impact of re-exports.

The bank nevertheless stressed that its indicators measure the presence of import competition rather than proving that Chinese imports have directly replaced Dutch production in every product category.

Looking specifically at chemicals used by Dutch industry rather than total gross imports, Rabobank estimates that 3.6% originate directly from China’s chemical sector. When indirect exposure through intermediate products and international supply chains is included, the figure rises to 5.3%.

Lower-Cost Chinese Chemicals Could Accelerate Capacity Closures

Rabobank also examined a hypothetical scenario in which Chinese basic chemicals become 10% cheaper. The assumption is intended purely for economic modelling and does not represent a forecast of future Chinese prices or policy.

Under this scenario, Chinese chemicals gain a larger share of Dutch production chains, while domestic basic chemical output declines by around 7%.

Some downstream industries would benefit from lower input costs, but the Dutch rubber and plastics sector could also experience lower production as Chinese competitors gain access to similar cost advantages.

Permanent Capacity Loss Could Increase Future Supply Risks

The longer-term concern becomes clearer when the model considers a subsequent restriction on Chinese basic chemical exports.

After becoming more dependent on lower-cost Chinese supplies, Dutch companies would be more exposed to a potential supply shock. Replacing the lost Chinese volumes would also become more difficult in the short term.

The model indicates that Dutch basic chemical production could recover once Chinese competition disappears. However, Rabobank cautioned that this recovery may be overly optimistic because the simulation assumes previously idle capacity can be restarted without additional costs and that sufficient skilled workers remain available.

In reality, permanently closed plants may have already been written off, experienced employees may have moved to other industries, and restarting production could require significant investment.

Rabobank therefore warns that future supply disruptions could have a much greater economic impact if domestic chemical capacity is permanently lost after years of increasing reliance on cheaper imports.

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