Chemical Industry: A recent B&K Research analysis suggests that, even with the most optimistic outlook, the global chemical industry is expected to experience a sluggish demand rebound in 2025.
Although volumes across all segments increased slightly in 2024, the research highlights that overall performance remained low, and businesses are cautiously confident about the upcoming year. The report states, “Chemical companies’ outlook for 2025 remains mixed after a modest 2024 performance, with some expressing concerns about demand recovery and others staying optimistic.” Demand growth is expected to be moderate, despite the optimistic outlook.
Key Developments in 2024:
The research shows that growth was primarily driven by volume increases as global chemical, specialty chemical, and agrochemical businesses reported their fourth-quarter and full-year results for FY24 and calendar year 2024. However, price trends remained weak across all segments, indicating that the rebound was not widespread.
The conclusion of the protracted worldwide inventory destocking phase in the chemicals and specialty chemicals sectors was one of the major events of 2024. The destocking period that had impacted demand and sales visibility largely ended by the close of 2024. As a result, businesses in these sectors reported year-over-year volume increases. However, inventory issues continued in the agrochemical sector. While the strain from excess inventory has somewhat eased, it remains a concern.
Agrochemical Business Developments:
Despite a challenging pricing environment, agrochemical businesses saw a year-over-year volume increase in 2024. The 2025 outlook for the chemical sector remains uncertain. Some companies remain cautious, while others express optimism about a demand revival. The survey indicates that even the optimistic players expect only moderate and modest demand growth. As inventories normalize, agrochemical companies expect significant volume growth in 2025. However, price pressures are likely to persist, and low agricultural product prices could dampen the recovery.
Crucially, the report highlights that volume recovery in specialty chemicals, agrochemicals, and global chemicals could drive the expansion of the Indian chemical industry. However, this recovery is expected to happen largely independent of pricing trends, except for any potential impact from recent tariff adjustments.
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