The chemical industry (which encompasses companies producing petrochemicals, polymers, agrochemicals, lubricants, coatings, paints, inks, flavours, fragrances and similar) is currently experiencing the consequences of a volatile global market, including energy and feedstock cost increases, reduced profit margins and pricing pressure. To ensure future resilience, balance their profit and comply with global sustainability initiatives, companies are already considering how to prepare for the year to come paying careful consideration to the prospected market demand and their customer’s sensitivity to price changes. Looking ahead, what is in sight for this part of the industry? How can businesses gear up for the future?

What will be upcoming trends for chemicals in 2024?

As chemical companies plan, refine, and adjust their strategies, here are some key trends to keep an eye out for in 2024.
  1. Delayed growth: According to , the chemical businesses has experienced a period of delayed growth throughout 2023. While the possibility for a potential uptake seemed to be at the horizon in the beginning of 2024, this trend will most likely continue in the next year. The industry outlook and projections that will populate the upcoming reports seems to point to the second half of the new year (or even as late as 2025) for this growth to manifest. Even if signs are difficult to read at the present moment, it seems that a full year will need to pass before the market is ready for growth in this space.
  2. Larger focus on efficiency: As less growth is expected, and consumer spending is likely to slow down, 2024 will see companies concentrating on cost consciousness. To counterbalance this, efficiency will be key. “, while building capabilities for tomorrow, taking cost out of the supply chain, and supercharging it” says Patrick Hore, Global Vertical Head of Chemicals at Maersk. To find efficiencies that are driven by capabilities, two solutions that most likely will be chosen are: better visibility and stronger partnerships. There will be more investments in software that can consolidate data to gain predictive analytics, using cloud-based platforms, artificial intelligence (AI), etc. to refine future decisions around procurement volumes and logistics. This will boost efficiency by alerting businesses of delays and possibly minimize the domino effect across their entire supply chain. Moreover, to ensure improved speed and agility, chemical players will try to establish partnerships with integrated logistics providers that can support.
  3. Stronger commitment to sustainability: 2024 will see environment regulations get more stringent. According to the , the chemical sector is still “the largest industrial energy consumer and the third largest industry subsector in terms of direct CO2 emissions”. The agency goes on addressing the issue of sustainability within the chemical industry stating that “to get on track, government and industry efforts need to address CO2 emissions from chemical production, as well those generated during the use and disposal of chemical products.” On top of accelerating their reduction of harmful waste, businesses involved in the chemical industry will need to agree to tangible initiatives to change their sustainability footprint, and doing so while building sustainable, transparent, and traceable value chains. Introduced in 2022, the new “European Commission Decisions” on the as well as the will see businesses gearing up to comply with these legal norms, adopted to reduce their environmental impact, commit to being sustainable, decoupling from fossil fuel dependencies, phase out polluting products, and seriously adopt circular economy practices. Where emission reductions are in place for production, in the supply chain come into focus. Here there is a growing need for solutions to meet targets as well as avoiding carbon taxation inefficiencies.
  4. “Chemistry as a service”: Technically advanced, specialty chemical producers will be collaborating with their end customers (e.g., semiconductor or automotive producers) for high tech solutions that are lent to them instead of sold. This idea of “chemistry as a service” will contribute with the circularity of materials and chemicals, designing their reverse logistic to be recycled or repurposed. This will benefit businesses as they will give back molecules and raw ingredients to the chemical experts equipped with the right infrastructure and expertise to properly recycle. It will be interesting to see how this trend will affect the circularity of the chemical business as well as how it will affect the supply chain services that are required to make it flow.
  5. Optionality creation: To create some resiliency around the current market situation, businesses will strive to create optionality. This will be done by flexing existing supply chain models to grab all possible growth opportunities and expand market share, ready for a recovery when times are more favourable. Industry players will continue to find smarter ways to partner and get more resilient, so that they can stay in a certain market and increase (or maintain) their profitability. This may entail switching suppliers, pivoting from export to import markets, creating new collaboration models.
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What will be the outlook for the chemical industry?

Given the delayed market growth, the future need for visibility, efficiency, resilience, and sustainability will be critical. 2024 will see the planning and management of supply chains move from solely being managed within logistics departments, to being part of the strategy discussed at company board levels. The economic outlook will be challenging, seeing the effects of inflation, interest rates, regulation etc. which pose a test on the chemical industry. All businesses involved in chemicals, as well as their supply-chain partners, will have the opportunity to counter these effects by designing collaborative solutions that can drive efficiency. The focus on supply-chains from the C-Suite should continue to ensure these efficiencies are leveraged, to not fall into a “game” of commoditizing supply-chains in a bid to lower costs short term, but rather super-charging them with deep capability to unlock businesses’ competitiveness. Nevertheless, creating optionality in the supply chains, and ensure resiliency under the current market situation will be a strong way to keep their supply chains, and related growth, flow.

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