The global chemical industry struggled in 2025, with total shareholder returns lagging broader markets over both five- and ten-year periods. Looking ahead to 2026, this gap is expected to widen as oversupply meets soft demand and rising trade and regulatory pressures continue to weigh on the sector. While lower inflation and selective feedstock advantages offer some relief, the outlook remains uneven across regions and value chains.
Key factors shaping the chemical outlook:
- Supply–demand imbalances are expected to persist in 2026, as lingering overcapacity, particularly in petrochemicals, continues to limit pricing power and keep operating rates under pressure.
- Global GDP growth is modest and uneven, weighed down by slow-growth sectors such as automotive and housing, which constrain the potential for a broad rebound in chemical demand.
- Easing inflation and, in some regions with lower feedstock and energy costs, especially where ethane and gas are abundant, may provide cost relief.
Overall, value creation in chemicals is likely to be selective in 2026. Chemical companies with cost-advantaged feedstocks, optimized portfolio mix, and exposure to resilient end-markets are best positioned to outperform amid overcapacity and policy uncertainty.
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