BY STEVE RANGER | EDITOR IN CHIEF
With tepid economic growth and continuing geopolitical upheaval, 2026 will be a year of uncertainty and uneven performance across the global chemicals industry.
2025 saw the industry buffeted by weak economic growth, geopolitical and trade upheaval and an increasingly fragmented regulatory environment – all trends that are likely to continue to create discomfort in 2026, according to experts.
‘Going into 2026, the chemical industry is nearing the bottom of a capital cycle,’ says consultant Deloitte in its 2026 Chemical Industry Outlook report. ‘Despite resilience through pandemic shocks and inflation, the sector now faces overcapacity, soft demand and global uncertainty,’ it warns.
It says the outlook for 2026 is slightly weaker than for 2025, and notes: ‘Demand will likely remain uneven in key end markets, while persistent overcapacity in basic chemicals continues to pressure operating rates and profit margins.’
As profit margins in the industry dropped, so chemical companies began to cut costs, restructure and close plants. More of the same is likely in 2026 as companies take a hard look at underperforming assets.
Deloitte says for all this, global overcapacity in basic chemicals is growing. New ethylene and polyethylene plants are coming in the US and Qatar, while China continues building polypropylene capacity, putting Europe and parts of Asia at a cost disadvantage.
‘With weak demand recovery and new capacity coming online, further shutdowns are likely,’ it warns.
But thin margins and oversupply do not make for an attractive market for mergers and acquisition, with Deloitte noting the current market ‘lacks both buyers and attractive assets’. It says that while significant growth in deals is unlikely until stability returns, portfolio re-evaluations could drive a wave of consolidation after 2026.
An analysis by the American Chemistry Council (ACC) paints a similarly tough picture of 2025 – but is slightly more encouraging about the outlook for the US chemicals industry in the second half of 2026.
‘America’s chemical industry faced a difficult economic environment during 2025,’ says Martha Moore, chief economist at the ACC. ‘Despite unprecedented levels of uncertainty that challenged the industry and its customer markets this year, we anticipate a recovery emerging mid-year of 2026.’
More than 80% of basic and specialty chemicals are consumed by the industrial sector, which means the fortunes of the sector are largely tied to the broader outlook for industry.
US chemical production started strongly but weakened as the year progressed so that across the year output volumes rose only 0.7%, with gains in basic, specialty and agricultural chemicals offset by lower output of consumer products.
The ACC said that it expects growth in only nine of the 20 key chemistry end-use industries it tracks in 2025, although this may increase to 12 in 2026. Automotive manufacturing is one of the most important end-use markets for chemistry; the average automobile contains more than $4,400 of chemistry products. Here US sales are likely to decline slightly next year. Housing - another important market for chemistry - is expected to remain flat in 2026.
US basic chemicals production is expected to be only slightly higher in 2025 than 2024, as gains in organic chemicals, synthetic rubber and manufactured fibres output offset declines in inorganic chemicals and plastic resins. Specialty chemical output finished the year up as did agricultural chemicals, but consumer chemicals finished lower.
The ACC said, for 2026, output of basic chemicals is expected to rise 1.2% while specialty chemical output is expected to be essentially flat as many end-use sectors continue to struggle. Production of agricultural and consumer chemicals is expected to fall by 1.0% and 1.5%, respectively.
Globally, chemical production expanded by 2.6% in 2025, with moderate growth in 2026 with volumes up by 1.9%. US chemical exports fell 2.0% in 2025 and are expected to drop another 0.6% in 2026, but US chemical imports also fell in 2025. Imports are expected to decline again in 2026, down by 1.6% - but both exports and imports are expected to rebound in 2027 and 2028.
‘The US continues to maintain a trade surplus in chemicals throughout the forecast horizon, but due to unfair import competition and overregulation, the US industry has the chance to lose its competitive advantage in the global market,’ the ACC warns.
Still, the longer-term outlook for US chemistry remains positive, the ACC says, pointing to the country’s energy and feedstock advantages plus the race to build out AI infrastructure, which will increase demand for chemistry industry outputs.
For Europe, the outlook is more challenging. European chemicals industry group Cefic says that 2025 marked a year of ‘challenge and transformation’ and warns Europe is losing ground in a rapidly shifting global market.
‘Europe’s share of the world chemical market has declined to 13%, while China now accounts for 46% of global sales and has become the EU’s leading source of chemical imports,’ it says.
Energy prices remain a concern, it warns, alongside weak demand, growing import pressure, and persistently low utilisation – 9.5% below 2014-2019 levels.
‘While Europe remains a net exporter – thanks especially to high-value specialty chemicals – its trade surplus has not kept pace with global growth, and the region has lost ground compared to other major exporters,’ it says.
Over the last two decades there has been a significant rebalancing of the global chemicals industry; the share held by the US has dropped from 22% to 12%, while the EU has seen its share drop from 27% to 13%. China in contrast has seen its share grow from 10% in 2004 to 46% in 2024.
For more, see analysis - Chemistry in 2026: The global outlook (Premium content).
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