Chemical Outlook midyear

Analysis

2020 Chemical Industry Outlook: A midyear update

Exploring chemical industry trends and the impact of COVID-19

The chemical industry continues to navigate a volatile market landscape—more challenging now since the onset of the COVID-19 pandemic. How can chemical companies not only adapt to the environment but also recover in the short-term and thrive beyond 2020? Our midyear 2020 chemical industry outlook explores four trends to help organizations face COVID-19’s impact on the chemical industry head on.

Midyear outlook: Understanding new chemical industry trends

In response to the COVID-19 pandemic, the US chemical industry stepped in to help the government and health authorities fight the spread of the disease and save lives. The sector responded to the health crisis by pivoting its production capacity toward the products and materials needed to combat the outbreak. But this is occurring in a market landscape where demand and prices for critical materials have slumped due to weaknesses in the automotive, construction, and consumer markets. So how can chemical companies compete in the COVID-19 era?

Our midyear 2020 outlook focuses on four chemical industry trends to follow in the second half of 2020 as companies attempt to recover and thrive. Navigate COVID-19’s impact on the chemical industry and build a growth story for the remainder of this year by acting on our insights.

Podcast: Midyear 2020 Oil, Gas and Chemical Industry Outlook

Pre-COVID-19 impact

2020 Chemical Industry Outlook

(published November 2019)

Walking the tightrope—vigilance required to keep moving forward in 2020

As we, once again, move from one year to the next, how do we assess the oil and gas and chemical sectors’ performance in 2019 and its prospects for 2020? As always, there are headwinds and tailwinds, risks and opportunities, uncertainties and foreseeable trends, but in this report we aim to take stock of the main factors to watch for in 2020 across the diverse oil, gas, and chemical industry. Over the past decade, we have seen the heights of bullish optimism and seemingly limitless investment during the years of the $100 per barrel world, from 2011 to mid-2014, and the lows of the price crash and extended oil downturn, from mid-2014 to 2017. Neither extreme seems in the cards for an imminent return as the industry has learned valuable lessons from both episodes, but uncertainties are clearly still a challenge to performance and investment.

As we evaluate the most prominent trends and issues for the oil and gas and chemical sectors in this outlook, executives in these businesses seem keenly aware of wider macroeconomic and business environmental risks, which seem to be gaining strength. Among these are:

  • Weakening economic growth, not only in the United States but also in Europe and China;
  • Ongoing, perhaps intensifying, trade tensions, which can create uncertainty, dampen growth, and lead to modifications in long-established supply chains; and
  • The many political risks, of course, including the US election cycle, the outcome of the Brexit process in Europe, and tensions in the Middle East between multiple states and non-state actors with different objectives.

And, while walking the tightrope across these shifting sands in 2020, fundamental changes in the long-term business environment could become more salient. So, attention to the coming disruptive forces associated with this century’s energy transition and sustainability imperatives is increasingly crucial alongside day-to-day positioning.

2020 Chemical Industry Outlook

2020 chemical sector trends

2020: Balancing the short- and long-term needs

How can company executives remain vigilant to the many risks and uncertainties clouding the outlook for 2020 while standing ready to embrace new opportunities for profitable growth in an evolving market landscape, which might look quite different in the next decade and thereafter, as disruptive forces accelerate? We see signs that many of the lessons from oil and gas of the large swings in the price environment and from chemicals of market dislocations have been taken on board, and these industries, as a whole, are better equipped to face the future than they have been at any time in the past decade. While carefully building capabilities for the long-term future around the energy transition and the circular economy (and demonstrating these to the investor community and other stakeholders), financial discipline and prudent investment strategies should help stabilize performance and reassure financial markets in the near term.

Energy and industrials trends in 2020

How will the trends we watched in 2019 play out in 2020? What emerging trends are on the horizon? Our industry outlook collection, covering Oil, Gas & Chemicals; Power & Utilities; and Industrial Products & Construction, evaluates sector landscapes to help executives better plan for success and unforeseen challenges.

Review the entire collection of Energy, Resources, and Industrials Industry Outlooks.

Look again

In today’s rapidly evolving marketplace environment, key business issues are converging with impacts felt across multiple industry sectors. What are the key trends, challenges, and opportunities that may affect your business and influence your strategy? Look for more perspectives and insights from some of Deloitte’s forward thinkers.

Discover more Industry Outlooks.

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