Chemicals: Major Diversified

The Chemicals: Major Diversified industry is a foundational sector, converting raw materials into essential products for various industries and consumer goods. It contributes significantly to global GDP and employs millions of people. The industry encompasses petrochemicals, inorganic chemicals, agricultural chemicals, and specialty chemicals, categorized into commodity and specialty chemicals. The chemical industry is its own largest customer, with products undergoing multiple processing stages within the sector.

The Chemicals: Major Diversified industry's performance is influenced by economic indicators, consumer behavior, technological developments, and regulatory changes. Economic growth and industrialization drive demand, while consumer behavior is shaped by product characteristics, brand reputation, and environmental concerns. Technological advancements like digitalization and AI enhance efficiency and innovation, leading to a shift towards specialty chemicals. Stringent regulations focused on safety and sustainability are also a major trend, driving investments in green chemistry and eco-friendly products.

The Chemicals: Major Diversified industry includes large multinational companies like BASF AG, Dow Chemical, and Bayer, as well as petroleum producers like ExxonMobil Chemical. These companies compete on price, innovation, and scale, with a focus on driving efficiencies, investing in high-growth areas, and enhancing customer centricity. Business models are evolving to incorporate digital value-added services and address sustainability goals.

The Chemicals: Major Diversified industry experienced tepid growth in 2024, with global chemical production increasing but facing uneven demand and overcapacity. Global chemical production is projected to rise by 3.4% in 2024 and 3.5% in 2025, recovering from a modest 0.3% increase in 2023. The global chemical industry size was valued at USD 6,182 billion in 2024 and is projected to reach USD 6,324 billion by 2025, growing at a 2.3% CAGR. The outlook for 2025 suggests continued recovery with moderate growth, driven by demand for energy transition materials, stable demand from key industries, and the shift towards specialty chemicals. Asia Pacific is expected to remain the market leader, while Europe is experiencing a slow recovery.

Investors in the Chemicals: Major Diversified industry face risks including sensitivity to economic cycles, energy price volatility, and supply chain disruptions. Geopolitical tensions and overcapacity issues can also lead to pricing pressure. A stricter regulatory environment poses compliance costs and forces companies to rethink business models. The industry also faces challenges such as the need for significant capital investment, a shortage of skilled workers, and the struggle to build viable business cases for sustainable products.