@LocalFluff's comment that production scale may have something to do with it has merit. Hydrazine propellant use in Europe is around 20 tonnes/year at the moment, which may be too little to justify investment in production facilities. But good luck finding direct evidence of that. So I looked for other factors that might play a role.
World production of hydrazine is around 120,000 tonnes per year. A large fraction of that is produced in Europe. Now most of this is hydrazine hydrate, converting that to the anhydrous hydrazine you need for propellant is reasonably complex.
I found one European supplier of rocket-grade hydrazines, Arch Lonza in Switzerland.
EU Regulation (EC) No 1907/2006 - REACH (which regulates health and safety for chemical processes) threatens to make working with hydrazine illegal in the EU.
In 2012, the European space industry produced a position paper arguing for an exemption to REACH for hydrazine used as a propellant.
The paper also states that annual use of hydrazine propellants amounts to less than 20 tonnes/year.
From this presentation:
- Space companies use chemicals in small to minute volumes
- REACH authorisation process applies regardless of volume
- Space industry is a minor market for many suppliers
- Limited control of supply chain
- Have to rely on registration by upstream manufacturer/importer and authorisation for upstream uses (e.g. formulation)
- Risk of sudden obsolescence of Space-qualified materials and processes due to REACH-induced alterations of materials and processes upstream
- Re-qualification and industrialisation of alternative materials and processes is a long- term and cost intensive undertaking – need to decide as early as possible on the items to include in planning