Chemical Industry Outlook 2021 has been saved
Chemical Industry Outlook 2021
Exploring chemical market trends and the continued impact of COVID-19
To succeed amid ongoing challenges in the chemical industry, companies should implement strategic initiatives in areas such as R&D and technology—including both short- and long-term focused efforts. Explore five trends companies in the chemical goods industry could see emerging as they deal with disruption in 2021.
The chemical market enters a period of profound transition
The COVID-19 pandemic has had an unprecedented impact on the economy and the state of the chemical industry, which experienced a significant decline in demand over the past eight months. While the industry was already facing cyclical challenges such as overcapacity, pricing pressures, and trade uncertainty before 2020, many postpandemic changes have shown a structural or disruptive character. Chemical companies have responded to the crisis by focusing on operational efficiency, asset optimization, and cost management.
As the industry moves into 2021, the changed economic, social, environmental, and political expectations are expected to play an even greater role in shaping its future. To succeed in the shifting industry landscape of the chemical market, companies should consider implementing a series of targeted, strategic initiatives across major functional areas such as R&D and technology. Too much focus on the short term, however, could mean that companies end up neglecting long-term opportunities, including investing in innovation, emerging applications, and adopting new business models that generate sustained growth.
A critical aspect of dealing with this disruption in 2021 will be understanding which customer behaviors are temporary versus those that are permanent, as recovery will likely be uneven across end markets and geographies. Companies can address this uncertainty by revisiting their product portfolio and conducting robust scenario planning that includes the unknowns. In this chemical industry outlook, we see five trends emerging in the coming year:
- Focus shifting toward new value streams and applications that can drive industry recovery and future growth
- Policy proposals related to regulation, trade, and sustainability could have material impact
- Feedstock volatility unlikely to change the global export competitiveness of US chemical companies
- Emerging opportunities amid growing concerns around plastics waste
- Chemical companies to increasingly leverage remote and digital sales channels
Preparing for new opportunities in the chemical market
Chemical companies can use the COVID-19–driven economic crisis as an opportunity to build lasting business strength by making informed and deliberate strategic choices about which end markets they focus on. Furthermore, as companies focus on divestments of noncore or underperforming assets to raise cash during the economic downturn, industry players that are well-prepared and have robust balance sheets can look at making smart acquisitions that create greater long-term shareholder value.
Companies can grow earnings in different operating environments if they build a product portfolio that can withstand changes in macroeconomic trends. The end of life for materials can often be the start of something new, and so chemical companies should collaborate with their stakeholders to find ways to create new value. 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.
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