Is the Global Chemical Industry in Crisis or Transition?

Introduction

For much of the past century, the chemical industry has been treated as a reliable barometer of industrial health. When chemicals expand, manufacturing, construction, agriculture, mobility, and consumer goods usually expand with them. When chemicals slow, the warning spreads across value chains. That is why the current moment feels so important. Around the world, producers are shutting assets, cutting jobs, restructuring portfolios, and reassessing where they can still earn acceptable returns. The headlines look dramatic enough to support a crisis narrative. Yet the numbers across multiple chemical end markets suggest that demand is not disappearing. It is being redistributed, repriced, and increasingly redirected toward more competitive regions, better cost positions, and more specialised products. TechSci Research values the Global Basic Chemicals Market at USD 696.88 billion in 2024 and projects it to reach USD 926.40 billion by 2030 at a 4.86% CAGR, which does not describe an industry in terminal decline; it describes an industry whose structure is being reworked under pressure.

The better question, then, is not whether the global chemical industry is under stress. It clearly is. The better question is whether that stress represents collapse or transition. According to TechSci Research, it is both: a crisis for high-cost legacy capacity that can no longer defend margins, and a transition for companies able to reposition around advantaged feedstocks, selective integration, specialty exposure, circularity, and disciplined capital allocation. TechSci Research places the Global Petrochemicals Market at USD 664.39 billion in 2025 with a forecast of USD 1,079.74 billion by 2031 at an 8.43% CAGR, reinforcing the point that scale demand remains intact even as the industry’s profit pools shift geographically and strategically.

The Signals of Stress Are Real

Anyone arguing that the sector is merely going through a normal cycle is underestimating the scale of the dislocation. Europe, in particular, has become the clearest theatre of strain. Europe’s petrochemical industry is facing a wave of closures after years of losses, high production costs, ageing plants, and rapid global capacity expansion led by China. Additionally, up to 40% of the EU’s ethylene capacity, out of a total 24.5 million metric tons, is at high or medium risk of closure, while a report from eight EU countries warned that 50,000 jobs could be at risk by 2035 if more crackers shut down.

That pressure is now visible in boardroom decisions. When management teams stop talking only about efficiency and start talking about shutdowns, disposals, and strategic reviews, the issue is no longer cyclical softness alone. It becomes structural competitiveness. Europe’s challenge is especially severe because many of its assets were built for a different era: one in which energy was cheaper, regulation was lighter, and global oversupply was less aggressive. Additionally, there is a cost gap clearly: ethylene production using naphtha in Europe can cost about USD 800 per metric ton, versus less than USD 400 in the United States using ethane and roughly USD 200 in the Middle East using ethane.

This Is No Longer Just a Commodity Story

The instinctive response is often to say that “commodities are weak, specialties are safer.” That is partly true, but the industry’s transition is broader than a simple commodity-versus-specialty divide. Specialty portfolios may offer better pricing power and customer intimacy, yet even those businesses are being examined through the lenses of capital intensity, geography, growth quality, and return on investment. TechSci Research estimates the Global Specialty Chemicals Market at USD 933.89 billion in 2024, rising to USD 1,315.41 billion by 2030 at a 5.88% CAGR. That suggests the value-added end of the chain still has structural room to grow, but it also means the race to own the right specialty segments is becoming more strategic and more competitive.

The same pattern appears in lower-carbon and next-generation adjacencies. TechSci Research values the Global Green Chemicals Market at USD 13.77 billion in 2024 and expects it to reach USD 18.89 billion by 2030 at a 5.37% CAGR. This matters because it shows where many management teams want to migrate their future earnings mix: not away from chemistry, but away from undifferentiated exposure and toward businesses that can align with sustainability spending, customer specification, and regulatory support.

How Companies Are Responding: Cuts, Closures, Mergers, and Portfolio Shifts

The corporate response is the clearest proof that the industry is in transition, not standing still.

For instance, BASF, BASF had already laid out plans to cut 2,600 jobs in Europe as it confronted structurally weak demand and high costs in the region. BASF’s own 2026 results release then showed how much further the reset had gone: between December 2023 and December 2025, the company reduced headcount by around 4,800 employees, excluding roughly 1,000 hires for its new Verbund site in China, while lifting its annual cost reduction run rate to around €1.7 billion by end-2025. BASF is not exiting chemicals; it is shrinking where economics are weakest and reinforcing where it believes future returns will be stronger.

Evonik offers another important example. In June 2026, the company said it would eliminate 3,200 jobs worldwide between 2027 and the end of 2029, after already planning to cut around 2,800 positions from October 2023 to the end of 2026. More tellingly, it also said it would discontinue its global polyester business in 2027. The Witten site in Germany is to close in 2027, with additional job cuts in Marl and Shanghai. That is what transition looks like in practice: not just overhead reduction, but a direct willingness to leave product lines and sites that no longer fit long-term economics.

LyondellBasell has moved on both closures and portfolio reshaping. In March 2025, LyondellBasell and Covestro announced the permanent closure of the PO11 Propylene Oxide Styrene and Monomer unit at Maasvlakte in the Netherlands, with shutdown and demolition preparation running through the end of 2026. Separately, the company launched a strategic review of European assets in its Olefins & Polyolefins and Intermediates & Derivatives businesses, then entered exclusive negotiations to sell sites in Berre, Münchsmünster, Carrington, and Tarragona to AEQUITA. At the same time, it said investment in its MoReTec technology and its circularity hub in the Cologne region would continue. That is not retreat from the sector; it is a deliberate migration from less-advantaged assets toward circular and lower-carbon ambitions.

Dow has been equally direct. In 2025, Dow announced plans to shut three upstream European assets: its ethylene cracker in Böhlen, Germany, its chlor-alkali and vinyl assets in Schkopau, Germany, and its basics siloxanes plant in Barry, U.K. The process is expected to begin in mid-2026 and be completed by the end of 2027, with about 800 roles affected. When a company the size of Dow begins rightsizing upstream Europe asset by asset, it is acknowledging that regional economics can no longer be solved by small productivity gains alone.

Then there is consolidation. Olin and Huntsman announced a definitive all-stock merger of equals in 2026 to form OlinHuntsman, with approximately USD 12.5 billion in combined 2025 revenue. The companies said they had identified more than USD 300 million of cost synergies and integration benefits, plus an additional USD 100 million of raw material integration benefits from 2031. In a market where scale, integration, and portfolio fit matter more than ever, merger logic becomes easier to justify.

Chinese Overcapacity Is Changing the Rules of Competition

No discussion of the industry’s present stress is complete without China. Chinese overcapacity is not a side issue. It is one of the central forces redefining global chemical economics.

Various industry reports suggest that China’s petrochemical sector is set to expand by almost half by 2028. China’s ethylene capacity is set to rise by 40 million metric tons by 2028, taking total capacity to 100 million tons, even as losses across refining and petrochemicals increased 8.3% in the first half versus a year earlier.

This combination is extraordinary. In many industries, falling profitability forces supply discipline. In chemicals, and particularly in parts of China’s petrochemical system, capacity can keep coming even when margins are weak, because local industrial policy, integration logic, energy strategy, and market-share ambitions all shape investment decisions. The result is a global market in which high-cost producers elsewhere do not just compete against demand softness; they compete against a moving wall of supply.

This is why the industry’s restructuring wave is not merely cyclical pruning. It is an adjustment to a new global price-setting reality. Chinese overcapacity depresses spreads, intensifies exports, and shortens the time that weaker assets can remain viable. It also forces a sharper divide between businesses that can win on cost and those that must win on formulation, application intimacy, service, or sustainability credentials.

Why the Future Still Looks Like Transition

And yet, this is still not a convincing case for saying the entire industry is in irreversible crisis. The underlying need for chemicals remains embedded in nearly every industrial system. Agriculture still requires crop inputs. Electronics still require high-purity gases and chemical processing materials. Healthcare, food, construction, mobility, energy, and packaging all remain chemically intensive. TechSci Research estimates the Global Industrial Gases Market at USD 116.07 billion in 2024 and forecasts USD 178.14 billion by 2030 at a 7.40% CAGR, while the Global Agrochemicals Market is valued at USD 223.42 billion in 2024 and projected to reach USD 274.65 billion by 2030 at a 3.46% CAGR. These are not numbers associated with end-demand collapse; they are numbers associated with continuing, uneven, and strategically contested growth.

What is collapsing in some regions is not the need for chemistry. It is the economic viability of certain legacy assets, cost structures, and operating assumptions. The winners of the next phase are unlikely to be the companies with the largest undifferentiated footprint. They are more likely to be the companies that combine three disciplines: first, feedstock or energy advantage where scale matters; second, sharper portfolio choices where specialisation matters; and third, enough financial discipline to exit sentimental assets before value destruction compounds.

What Business Leaders Should Watch Next

The most important executive question now is not whether to prepare for change, but which kind of change to prepare for. If Chinese supply growth continues to outrun global demand growth, more capacity rationalisation in Europe and parts of Asia becomes likely. If energy and carbon costs remain structurally higher in some regions, further closures and consolidation will follow. If customers increasingly reward reliability, low-carbon content, and performance rather than just volume, portfolio migration will accelerate.

That means boards should watch five things closely: capacity additions in China; the pace of European rationalisation; merger activity among mid-to-large producers; the rate at which companies redirect capital into circularity, higher-value specialties, and advantaged complexes; and whether policymakers decide that strategic chemical capacity deserves more active industrial support. The old chemical map is being redrawn in real time.

Conclusion

So, is the global chemical industry in crisis or transition?

The most accurate answer is this: it is in crisis at the asset level and in transition at the industry level. The crisis is visible in plant shutdowns, layoffs, and forced restructuring. BASF is cutting deeper into its cost base. Evonik is restructuring and exiting polyester. LyondellBasell is closing units and reshaping its European footprint. Dow is shutting major upstream assets in Europe. Olin and Huntsman are seeking scale through merger. Behind all of this sits a global market reshaped by cost asymmetry, capital discipline, and especially Chinese overcapacity.