To learn more about this report, request a free sample copy The che… This article describes three major chemical industry trends to watch in the coming years, based on studies published by MarketsandMarkets, a global market research firm. A rebound in China and recovering manufacturing activities around the world … While technology may help to cope with climate change, evolving trade dynamics may make the fight against its effects more complicated, as the regulation in different jurisdictions may vary significantly. The impetus behind this strong performance has been the chemical industry’s ability to significantly increase earnings on a base of total revenues and invested capital that has grown more slowly, at a rate tracking close to global GDP growth. Companies can grow earnings in different operating environments if they build a product portfolio that can withstand changes in macroeconomic trends. The proliferation of new, predominantly Chinese competitors in many segments is leaving a trace. Taking action against systemic bias, racism, and unequal treatment, Key opportunities, trends, and challenges, Go straight to smart with daily updates on your mobile device, See what's happening this week and the impact on your business. The global chemical distribution market size was valued at USD 239 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of5.3% from 2020 to 2027. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. Please click "Accept" to help us improve its usefulness with additional cookies. cookies, McKinsey_Website_Accessibility@mckinsey.com, The impact of COVID-19 on the global petrochemical industry. For an industry that is used to building increasingly larger plants that have a lifetime of many decades, this concept will not be easy to adapt. Do not delete! Yet intercontinental trade is still significant for many players, such as those with access to advantaged feedstock or labor costs, and many chemical companies are dependent on customers that ship their products from continent to continent. Chemical companies in the United States have responded to the crisis by focusing on operational efficiency, asset optimization, and cost management. With the chemical industry on the brink of profound change, disruption is bringing new challenges – and new opportunities. Although the EBIT margin of 12% was lower than the 13% in 2017, the overall EBIT dollar improved as the chemical industry saw industry-wide sales growth of 4%. Sixty-four percent of chemical executives surveyed in a Deloitte postelection poll indicated … This statistic displays a forecast of the annual production growth in the chemical industry in the United States from 2020 to 2025. In return, the uplift after the trough of the crisis will be much higher than the increase in GDP, since the very same downstream companies need to restock. Press Release IaaS in Chemical Global Market 2021, Share, Growth, Trend, Industry Analysis and Forecast to 2026 Published: Jan. 6, 2021 at 3:44 a.m. Use minimal essential
6. For example, the bodies of self-driving cars might be made of plastic because the radically reduced number of accidents no longer requires them to be made of steel and aluminum. The total sales of the 170 chemical companies surveyed rose by 9% last year compared with 2017 – and the profitability of the chemical industry as a whole was also strong last year. And there were layoffs: the chemical … This message will not be visible when page is activated. As per the IBEF, the chemical sector is projected to reach $300 billion by 2025, growing at an annual growth rate of 15-20% owing to the rising demand for … ROIC: The chemical industry succeeded in increasing its ROIC in the first half of the investigated period. Historically, the chemical industry has generally been a slow adopter of new digital or analytics technologies. AI is increasingly pervasive in all activities that deal with large sets of data—such as production, marketing and sales, and R&D—opening the way to a new level of functional excellence and a delay in capital expenditures. Interestingly the Indian chemical industry is one of the fastest growing industries in the world. The growth of the chemical industry will offer immense growth opportunities. Increasing consumption of chemicals across end-use industries such as construction, pharmaceutical, polymers and resins coupled with high complexity in reaching the customers is likely to drive the opportunities for chemical distributors over the coming years. One specific example is capital allocation to greenfield assets or cross-border M&A: depending on which trade scenarios develop, assets in certain countries might be highly valuable (with inbound trade being restricted) or a liability (with restricted feedstock or exports). All three scenarios are challenges for the chemical industry. The chemical industry creates an immense variety of products which impinge on virtually every aspect of our lives. The construction chemical industry is dependent on the growth and demand of construction industry. Technology might lead to certain process automations (for example, pricing machines negotiating with procurement machines) and change the way chemical companies think about complexity, scale, and in- and outsourcing of administrative activities in particular. The level of pattern recognition made possible by AI will likely increase performance transparency around equipment and employees, chemical products (in particular, specialties), management teams, and individual activities or business lines. However, industry ROIC has not grown further since around 2011 and has recently started to decline globally. and the Indian chemicals industry is projected to reach $ 304 bn by 2025. However, it has also been responsible for damage to the environment and natural ecosystems of the country. Different portfolios will vary in their exposure to the upcoming regulation and upcoming trends. The swing for specialty chemicals was much wider; the segment sank 10.8% this year compared to last year’s 2.5% growth. The Global Construction Chemical Market is anticipated to reach a market valuation of US$62.73 billi o n by 2025 expanding at a CAGR of 7.10% in the course of the forecast period (2019–2025). A slowdown in demand growth for commodity plastics resulting from increased recycling and application bans, must now be considered in long-term forecasting. Psychological safety and the critical role of leadership development, The COVID-19 recovery will be digital: A plan for the first 90 days. In the coming year, players in the chemical goods industry should keep their eye on these larger trends shaping consumer preferences and the end-market environment in order to focus on new growth opportunities and extract more value from current resources and assets. Duane Dickson is a vice chairman and principal in Deloitte LLP’s Energy Resources & Industrials industry group, as well as the US Oil, Gas & Chemicals sector leader and the Global Energy, Resources & ... More. Now, we revisit those observations to confirm the underlying assumptions and trends. From life-saving healthcare devices and personal care goods to food, transport and clothing, around 100,000 [citation needed] The fastest-growing areas have involved the manufacture of synthetic organic polymers used as plastics, fibres and elastomers. See Terms of Use for more information. Growth: Volume growth for chemicals has been trending downward over the past 20 years, even before the onset of COVID-19. One will be to drastically reduce consumption in industrialized nations to meet the acceptable maximum of CO2 emissions in a framework that prevents a 2°C temperature increase by 2050 (Exhibit 2). Chemical companies from the United States are among the industry’s leading global players.With a revenue of 42.9 billion U.S. dollars in 2019, Dow is the largest U.S. chemical … The market is anticipated to witness a significant growth over the years, owing to growth in production of chemicals and increase in demand for specialty chemicals across various industries. If new capacity growth combines with a slowdown in demand growth, the resulting oversupply scenario will significantly affect industry profitability. Sequentially Revenue grew by 9.68 %. This transparency will inform shareholders and educate their view on the operational and strategic performance of companies. Petrochemicals are rapidly becoming the largest driver of global oil demand The growth in demand for petrochemical products means that petrochemicals are set to account for over a third of the growth in … Digital upends old models. Leading chemicals players have already begun making the required investments into these capabilities and are thus benefiting from resulting productivity gains (“analytics-enabled functional excellence”) and can build on strong foundations for future technological progress of AI. This is only the start—pressure will deepen from various stakeholder groups. Subscribed to {PRACTICE_NAME} email alerts. In brief In brief. As the enabler of the physical world, it may need to deal with a relevant reduction in demand. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. All these developments will make strategy development for chemical companies more complicated (especially because they may be interdependent). Against this backdrop, we see three additional trends significantly affecting the future of the chemical industry: sustainability, demographics, and technology. Later, we may see significant shifts in customer value pools and far-reaching automatization of business processes. products, chemical companies can turn these changes to their advantage and drive growth while helping to shape a greener, cleaner, more sustainable future. The chemical industry has shown rapid growth for more than fifty years. Evolution of the Chinese chemical industry: The solidification of China as a global force in chemicals … A more detailed assessment on the impact of COVID-19 on petrochemicals can be found in our recent publication “The impact of COVID-19 on the global petrochemical industry.”. Part of this regulation will likely vary by jurisdiction. Chemical industry fueling Texas growth. Major trends such as the accelerating deglobalization and potential regulation to curb climate change will not make it any easier. Industry associations may very well see their role as the conduit for chemical companies to articulate themselves to governments expand. Industry growth vehicles, driving chemical companies to focus on battery coatings and advanced materials. tab, Engineering, Construction & Building Materials, McKinsey Institute for Black Economic Mobility. As modern digital technology becomes more relevant, its initial focus will be on increasing productivity, but it will also have the potential to support the development of new business models. Dublin, Feb. 12, 2021 (GLOBE NEWSWIRE) -- The "Chemical Logistics Market by Mode of Transportation, Services, and End Use Industry: Global Opportunity Analysis and Industry Forecast, 2020-2027" report has been added to ResearchAndMarkets.com's offering. This box/component contains JavaScript that is needed on this page. Industry growth vehicles, driving chemical companies to focus on battery coatings and advanced materials. Please enable JavaScript to view the site. Look for more perspectives and insights from some of Deloitte’s forward thinkers. It is now threatening long-term demand growth for the chemical industry. The current debate about plastics recycling makes this clear: the best way to reuse material is nonuse in the first place. Other examples may include insulation materials (for buildings and to protect power infrastructure from increasing wildfire risks), materials enabling energy storage, construction chemicals to protect shores, or bio-based or recyclable materials. Although every company must solve the challenges it faces in a way befitting its individual product portfolio and context, some points stand out for industry-wide consideration: All of the above will happen in an environment where shareholders will be ever-better informed and thus more demanding on financial and environmental, social, and governance performance. With the chemical industry on the brink of profound change, disruption is bringing new challenges – and new opportunities. It is expected to register a growth of 13-14% over the next 5 years while petrochemicals have registered a growth of 8-9% over the same period. This can be easily rationalized on the basis that the chemical industry is a provider of physical goods, usually with a relatively small number of suppliers for a given product and, therefore, relatively high industry utilization. Please try again later. Growth assumptions may need to be revisited in the light of likely upcoming sustainability regulation and the resulting impact on customer demand. The chemical industry sees an annual growth rate of 15% to 20%. Domestic chemicals industry, estimated at ₹6.3-6.8 lakh crore in fiscal 2019, clocked 7-8 per cent CAGR during FY2014-FY2019. The ACC estimates that US chemical output fell 3.6% in 2020 after a 0.1% dip in 2019. Management teams in the chemical industry should prepare for this accelerated change as soon as the fight against COVID-19 permits.