The global chemicals industry is a fiercely competitive sector characterised by ongoing market consolidation. The economies of scale, resources for research and development, innovation and marketing available to large companies may leave smaller companies at a competitive disadvantage. In February 2025, Atradius released their Chemicals Industry Trends. Here, FinCred shows the trends Atradius forecast in key markets from 2025.
Globally, a recovery in the chemicals sector gained momentum in the US and Western Europe throughout 2024. This was driven by reducing energy prices and an increase in demand from consumers and key buyer sectors. Atradius expect chemicals production to increase at an annual rate of 3% in 2025 and 2026.
The US tariff increases have the potential to result in trade wars with possible retaliatory measures from affected countries. The resulting effect would be to fragment chemical markets, reduce efficiency and disrupt established supply chains.
USA
In 2024, chemical production increased by 2.1%, Atradius expect there will be further solid growth rates of 3.8% in 2025 and 2.7% in 2026. This will be driven by increased consumer demand and a recovery in key buyer sectors such as automotive and construction, due to the new administration’s monetary easing and expansionary fiscal policies. However, by 2026 the impact of import tariffs may start to have a negative impact on US chemicals production.
China
2023 and 2024 were strong years for China’s chemical production growth. This is expected to slow to 2.2% in 2025 and 3.6% in 2026. This is driven by subdued consumer spending, decreased manufacturing activity, and a significant slowdown in export growth.
India
Domestic consumer demand in India is strong, driven by the expanding economy and increasing population. Chemicals production is expected to expand by 6.4% in 2025 and 10.9% in 2026. Government policies are supporting growth in the sector.
Japan
Atradius expect there to be a return to chemicals production growth in 2025 of 1.5%. This follows contractions in the sector through 2023 and 2024. Automotive, a key buyer sector for the chemicals industry, experienced a major slump in early 2024. The rebound of the automotive sector is set to support a rebound in production in the chemicals sector. Japanese chemicals producers face competition from cheaper products in the USA, as well as price pressure and oversupply from China.
Eurozone and UK
A modest recovery in consumer demand and industrial output is supporting chemicals production growth in the eurozone of 2.1% in 2025 and 2.6% in 2026. In the UK, output growth contracted from 2022-2024. In 2025, a return to low growth at 1.7% is expected. Energy prices have reduced since 2023 but gas prices remain above pre-covid levels. This affects the competitiveness of European products compared to US and Asian producers.
Germany
Germany experienced massive contractions in production in 2022 (-11.8%) and 2023 (-9.2%). 2024 saw a rebound with production increasing by 6.9%. However, in 2025 Atradius expect consumer demand and high energy prices to impact competitiveness, so production growth is only forecast to be 1.9%. Atradius comment that the German chemicals sector is robust, with solid capitalisation, access to external financing and a well-balanced debt profile. However, high energy prices are a long-term concern and will continue to affect competitiveness, which may lead chemicals manufacturers to relocate to countries with lower energy costs.
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