The global chemicals industry is a vast and diverse sector encompassing a wide range of products, from basic chemicals and petrochemicals to specialty chemicals and consumer products, serving virtually every major industrial sector worldwide. It is structured around a few key segments, including bulk chemicals, agrochemicals, plastics, polymers, coatings and pharmaceutical ingredients. Asia-Pacific, led by China, has become the largest producer and consumer of chemicals, accounting for around 50% of both, driven by rapid industrialization and growing domestic markets. Europe and North America remain significant hubs, with strong innovation in specialty chemicals, although Europe lately faces challenges from higher energy costs and regulatory pressures. The US is one of the largest exporters and consumers, with a well-developed petrochemical industry supported by abundant shale gas resources. Overall, China is the world’s biggest exporter and consumer, leveraging economies of scale and government support to expand capacity rapidly. The global chemicals market is valued at several trillion dollars, with steady long-term growth driven by rising demand in emerging economies, increasing applications in sectors like automotive, construction and electronics and ongoing innovation in sustainable and high-performance chemicals. Yet, the short-term outlook is still negative as the previous challenges (Covid-19 pandemic and the conflict in Ukraine) have been exacerbated by persistent geopolitical tensions, the still weak global economy and the trade war initiated by the new Trump administration.
The chemical sector experienced a marked deterioration in 2023, followed by a resilient 2024. Global chemicals sales fell by almost -8% y/y in 2023 – a contraction never seen before – explained by decelerating demand for chemical products around the world amid high economic uncertainty. In Europe the drop was even worse (-12% y/y), given the region's significant loss of competitiveness as energy prices soared, as well as the very low output levels (with some European firms closing production plants) and overall weak demand. In 2024, the overall performance improved but the sector’s capacity continued to outpace demand, which made it difficult for companies to raise prices as much as they would have liked to. China, which dominates this market, had weaker-than-expected GDP growth (+5.0% in 2024 vs +5.4% in 2023), while the global economy grew only by +2.8% last year, slowing the recovery. The worst is already behind for European players: EU chemicals production rose by +2.5% y/y in 2024 after two consecutive years of declines (-5.9% in 2022 and -9.0% in 2023), with the highest output increases recorded in Poland (+7.0%) and Belgium (+6.2%). EU chemicals exports remained stable in 2024, increasing only by +1.0% y/y, up by EUR2.3bn. In parallel, the EU’s weak demand for chemicals led imports to fall by EUR9.6bn, which generated a chemicals trade surplus of EUR47.1bn in 2024. According to Eurostat, the biggest extra-EU suppliers of the region in 2024 were China and the US, which together sold EUR63bn of chemicals products to the EU. The biggest clients of EU firms were the US and the UK, to which the region exported EUR66.8bn. Although the worst is over, the recovery is slow and depends greatly on the evolution of the economy in the remainder of 2025. The European chemical sector is still significantly less competitive than pre-crisis levels (due to the combination of relatively weak demand and still-high energy costs), especially in the commodity chemicals and petrochemical segments where China benefits from lower production costs. Compared to the US, Europe's gas prices were 3.3x higher in early 2025, confirming its disadvantages position against American peers since the start of the conflict in Ukraine. This gap in natural gas prices between Europe and its competitors is projected to persist in the short-term, which will continue to affect companies’ margins if chemicals prices fail to increase and/or if other costs fail to decrease.
The outlook for 2025 remains cautious, with demand still limited. Weak business and consumer sentiment is expected to keep revenues subdued throughout the year. With the global economy projected to grow by approximately +2.5% y/y in 2025 (+1.5% in the US and +1.2% in the EU), chemical sales are forecasted to increase modestly by +1.0% to +2.0% y/y, followed by a stronger improvement of around +4% to +5% y/y in 2026. On one hand, leading indicators such as sector PMIs remain in contraction in some regions or hover near the 50 mark. On the other hand, business and consumer confidence indices, though stabilized, are not showing the desired improvement. Continued uncertainty over trade policies is likely to discourage investment in long-term chemical projects. Overall, a full recovery in the sector remains distant. Demand growth is expected to face ongoing challenges throughout the year due to persistent trade tensions, which could fragment global chemical markets, reduce efficiencies and disrupt established supply chains.
