Chemical Industry Forecast For 2022 On Track To Make A Complete Recovery

24 October 22

Since 2021, the US chemical sector has experienced a robust rebound; the industry may fully recover in 2022. Our annual outlook covers five issues, from sustainability to consumer centricity, that chemical firms will pay close attention to in the next year.

A Renewed Dedication To Sustainability

Strong demand for commodity and specialty chemicals could keep prices high throughout the year as the chemical sector enters 2022. As top industry companies concentrate on increasing capacity and entering developing end markets via both organic and inorganic means, the sector should also see an increase in capital investment. However, the industry may see margin difficulties due to the rising cost of raw materials, which is expected to continue through the first half of 2022.

Most US chemical businesses will likely prioritize sustainability and decarbonization as one of their top priorities in 2022. To reduce the carbon footprint of both themselves and their clients, as well as plastic waste, several chemical businesses are anticipated to boost their investment in research and development (R&D) skills. As a result, 2022 should witness an increase in the number of industrial entities setting goals and developing plans for reducing emissions and making money from waste. Please find out more about the future in our yearly industry overview.

Five chemical industry trends to watch Positioning for a strong rebound in key end markets amid rising costs


End-Market Growth

As economies recover and constraints are eliminated in 2022, the US chemical industry should rebound robustly. This should increase plant utilization rates, which were severely affected by the epidemic. Following a 13.5% fall in 2020, US chemical volumes are predicted to improve by roughly 1.5% in 2021 and 3.0% in 2022, while shipments are predicted to rise by about 8.0% in 2021 and 2022. As major economies begin to operate again and import demand in partner economies increases, US chemical exports are likewise anticipated to increase dramatically.

Inflation, though, is one of the dangers of this robust recovery. For instance, Brent crude oil spot prices sharply recovered and held steady in September 2021 at an average of $74 per barrel. These inflation statistics show how difficult it is to meet the rising labor and raw resources demand. Once the global recovery gains traction and government support programs are dialed down, central banks in the United States and Europe anticipate that supply constraints and inflation will ease in 2022.


Transforming Asset Portfolios To Help Weather Volatility

After overcoming difficult market conditions in 2020 and 2021, chemical businesses entered 2022. COVID-19 adds volatility to an already unpredictable decade. Due to the pandemic, demand for plastics and specialty materials diverged, putting the portfolios of assets owned by enterprises to the test. The fluctuations in chemical spending partly reflect the volatility of commodity prices. Still, they are primarily influenced by longer-term trends, such as the expansion of petrochemical production in the US Gulf Coast. Similar pricing and demand instability is projected to occur in 2022, and the chemical industry will need to adjust, especially if the energy transition quickens.

Chemical businesses will likely concentrate on realigning their asset portfolios and weighing trade-offs between various strategic options with important factors, including scale, the breadth of their product offerings, and expansion prospects.

Shifting demand


Climate Change Driving Sustainability Efforts


As the effects of climate change become more obvious in 2022, the chemical sector will probably be pressured by governmental and scientific forces to decarbonize. Moreover, as the public’s awareness of plastic waste and incorrect end-of-life disposal grows, the business may come under increased scrutiny.

While the chemical sector struggles to reduce carbon emissions because it relies on process heat, technological improvements in decarbonizing chemical manufacturing could have a significant worldwide impact. Since chemistry serves as the foundation for numerous value chains, the industry’s advantages of decarbonizing chemical businesses may not be limited.


Accelerating Business Transformation Through Digital Technologies

Digital transformation

The potential for modern data analytics and digital technologies to revolutionize the chemical sector is still enormous but mostly untapped. Modern digital tools and technology offer a financially viable method for increasing the efficiency of existing operations and creating new goods and procedures. Significant progress can be anticipated in three areas in 2022: data availability, data processing, and engineering and materials research. This is due to the convergence of increasing improvements, such as advances in sensors, cognitive computing, and analytics.

Chemical companies have historically adopted advanced data analytics and digital efforts in silos, which have slowed operations, increased costs, and produced ambiguous results. Nevertheless, chemical companies are starting to understand more and more that digital transformation entails incorporating newer, better technology and coordinating culture, people, structure, and duties.


Embedding Customer-Centricity To Create Differentiation In The Marketplace


Over the past ten years, and especially in the years following COVID-19, customer expectations and behaviors have significantly shifted. Today’s consumers want chemical companies to consistently satisfy their requirements and expectations to earn their loyalty. The degree to which customer-centricity is ingrained inside each link in the chemical industry’s value chain may determine our capacity to execute this.

Customer-centricity should be crucial to staying one step ahead of the competition, especially given the convergence of numerous industries that are rebranding and repositioning themselves. Digital technologies are anticipated to be used by chemical companies to enable automated trend detection and social media scanning to find more general market trends and client needs. This consumer-centric innovation could improve the breadth, size, and returns of R&D activities, which elicits real-time feedback using customer engagement technologies.