Attention! New EU Regulations Will Impact These Areas of China‘s Chemical Industry

News Event

On June 3, the European Union officially released Regulation (EU) 2025/1090, adding two commonly used industrial chemical solvents—N,N-dimethylacetamide (DMAC) and 1-ethylpyrrolidin-2-one (NEP)—to Annex XVII of the REACH Regulation's list of restricted substances. The regulation will enter into force on June 23, 2025, with restriction requirements taking effect from December 23, 2026.

Deeper Insight

The addition of DMAC and NEP to the EU REACH Regulation’s restrictions will impact various segments of China’s chemical industry to varying degrees, affecting numerous companies across upstream and downstream sectors. These impacts extend beyond direct export limitations, triggering a series of ripple effects including adjustments in production processes, increased costs, and shifts in market share.

The chemical fiber industry, one of the primary application areas for DMAC, will face significant challenges. DMAC is a key solvent in the production of polyacrylonitrile (PAN) fibers, and many major Chinese chemical fiber enterprises such as Jilin Chemical Fiber and Sinopec Shanghai Petrochemical rely heavily on this process. Although the regulation grants the chemical fiber industry a transition period until June 23, 2029, this merely delays rather than eliminates the impact. During this period, relevant companies must invest substantial funds in process modifications or finding alternative solvents; otherwise, they risk losing access to the EU market.

The lithium battery manufacturing sector, a major user of NEP, will also be affected. NEP is primarily used in lithium battery production as a solvent for electrode coating and as a diluent for binders, and many domestic battery companies currently use it. As the December 23, 2026 deadline for enforcement approaches, these companies face two choices: either completely eliminate NEP from products exported to Europe, or invest heavily in production line upgrades and demonstrate that worker exposure levels are below DNELs (Derived No-Effect Levels—the key parameter under EU REACH for assessing chemical substance impacts on worker health). Given the global nature of the lithium battery industry, this restriction could reduce the competitiveness of Chinese battery manufacturers in the European market, especially when competing against foreign firms that have already begun transitioning to alternative solvents.

The electronic chemicals sector is another significantly impacted industry. NEP is widely used in semiconductor and display panel manufacturing as a photoresist stripper, epoxy resin edge remover, and display coating spreader. Domestic electronic chemical producers exporting related products to Europe may face compliance challenges. Due to the extremely high purity requirements in electronic chemicals, the technical difficulty of finding substitutes is considerable, potentially leading to some products temporarily exiting the European market. At the same time, this will drive domestic companies to accelerate the development of low-toxicity alternatives.

The coatings and adhesives industries cannot remain unaffected either. DMAC, an excellent solvent for polyurethane and polyimide resins, is widely used in high-performance coatings; NEP serves as an adhesive and release agent. Domestic companies exporting premium coatings and adhesives to Europe may need to reformulate their products. Given the long product certification cycles in these industries, companies must initiate countermeasures immediately to meet the 2026 restriction deadline.

The pharmaceutical and agrochemical industries, traditional users of DMAC and NEP, will also be affected. DMAC is used as a reaction solvent in drug synthesis, while NEP is applied in agricultural chemical formulations. Agrochemical companies in particular face dual pressures: complying with EU REACH restrictions while meeting increasingly stringent pesticide residue standards.

Geographically, domestic production of DMAC and NEP is concentrated in regions such as Shanghai, Hubei, and Henan, where chemical enterprises will be hit first. Hubei Province, a hub for NEP capacity, may see its lithium battery and electronic chemicals supply chains face adjustment pressures. Meanwhile, the Yangtze River Delta region, home to numerous chemical fiber and coatings companies, will also be affected.

In summary, the EU’s restriction measures will bring structural changes to China’s chemical industry, accelerating industry consolidation. Leading enterprises with strong technological capabilities and financial resources may gain larger market shares by proactively developing alternative solutions, while small and medium-sized enterprises may face greater survival pressures, potentially being forced to exit the European market or undergo transformation.