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Read articleChemicals companies face a difficult combination of weak demand, excess capacity and unstable energy economics that is widening differences between assets and regions
We see process-industry leaders reassessing portfolios, capacity and investment as feedstock volatility, trade fragmentation and transition costs reshape plant competitiveness.
The chemicals sector enters September 2026 with limited room for assumptions based on a synchronized industrial recovery. Weak demand and elevated inventories are weighing on several chemical and resin markets, while energy and feedstock exposure remains vulnerable to geopolitical disruption. Capacity additions and different regional cost positions are widening the gap between advantaged and marginal assets. Companies must determine which businesses still deserve capital, where restructuring or consolidation is required and how decarbonization investments interact with already difficult asset economics rather than treating every plant or product chain as strategically equivalent.
Focus
Chemical producers face a structural capacity problem, not just another weak cycle
New capacity, soft demand and regional energy differences are pushing commodity chemicals toward prolonged margin pressure.
Read nowStrategic Challenges
Which chemical assets still deserve capital in a structurally oversupplied market?
The challenge is deciding where to defend scale, exit disadvantaged capacity or shift toward specialties with stronger economics.
Read nowStrategic Impacts
Portfolio restructuring is becoming central to chemical-sector competitiveness
Persistent overcapacity is forcing sharper choices across assets, geographies and product chains rather than reliance on cyclical recovery.
Read nowObserved Patterns
Chemical companies often wait for the cycle to fix problems that are structural
Capacity additions, regional cost disadvantages and commoditization can make historical margins impossible to recover through demand alone.
Read nowStrategic Challenges
Which chemical assets still deserve capital in a structurally oversupplied market?
The challenge is deciding where to defend scale, exit disadvantaged capacity or shift toward specialties with stronger economics.
Read nowStrategic Impacts
Portfolio restructuring is becoming central to chemical-sector competitiveness
Persistent overcapacity is forcing sharper choices across assets, geographies and product chains rather than reliance on cyclical recovery.
Read nowObserved Patterns
Chemical companies often wait for the cycle to fix problems that are structural
Capacity additions, regional cost disadvantages and commoditization can make historical margins impossible to recover through demand alone.
Read nowIndustry Challenge
Chemical producers must restore returns in a market still burdened by overcapacity
Chemical companies are contending with sluggish demand, persistent overcapacity in several basic-chemical chains and large regional differences in feedstock and energy costs. New capacity continues to pressure utilization and pricing, while tariffs and geopolitical disruption complicate sourcing and trade flows. The challenge is to protect cash and margins without underinvesting in innovation or future growth. Portfolio choices, plant economics, working capital and energy exposure need to be managed together, with weaker assets increasingly difficult to justify when global costs diverge.
Future Outlook
Chemicals will move toward leaner portfolios, smarter plants and lower-carbon feedstocks
The industry's next phase will favor companies that combine sharper portfolio discipline with digital operations, differentiated specialty products and lower-carbon production pathways. AI and advanced analytics can improve maintenance, planning, yield and commercial decisions, but technology alone will not solve structural overcapacity. Producers will need to rethink which assets and value chains they can defend globally. Greater circularity, alternative feedstocks and electrification may reshape selected processes, while consolidation could accelerate.
Market Outlook
Chemicals remain in a difficult downcycle as excess capacity weighs on margins
The chemicals market remains challenging in 2026. Demand recovery is uneven, while overcapacity in major petrochemical chains continues to pressure operating rates and profitability, especially where producers face high feedstock or energy costs. Companies are prioritizing cash generation, portfolio restructuring and selective investment, with specialty chemicals generally offering more defensible economics than commoditized products. New capacity in lower-cost regions is reinforcing global cost-curve differences. Broad-based growth has not returned, making capital discipline essential.
POV
Not every chemical asset deserves to survive the next cycle
Where structural cost position is broken, waiting for demand recovery may simply postpone a portfolio decision that economics already made.
Read nowOur approach
Evaluate process-industry competitiveness at the level where feedstocks, assets, energy and portfolio economics intersect
Our approach� connects market demand with feedstock position, plant utilization, energy exposure, logistics, technology and regional cost structures. We assess products and assets individually before aggregating them into portfolio conclusions, because apparently similar businesses can occupy very different positions on the global cost curve. We also examine how decarbonization, regulation and new capacity affect those economics over time. This provides a basis for deciding where to invest, restructure, consolidate, integrate or exit rather than spreading capital across assets whose future competitiveness is structurally different.
The data and estimates presented are indicative and intended for illustrative purposes. Actual outcomes may vary based on each company’s specific context, market conditions, operating model, implementation choices, and the quality and consistency of execution, including actions undertaken by the client.
Keypillars
Explore the key pillars that define this capability and shape how we create focused, measurable business impact.
Process economics
Examines feedstock costs, yields, energy intensity, utilization, and margin structures across continuous and batch production environments
Value chain integration
Connects raw materials, processing assets, specialty products, distribution, and end-market demand across complex chemical value chains
Transition pressures
Tracks decarbonization, circularity, regulation, material substitution, and technology shifts reshaping process-industry economics
Is your business prepared for changing feedstocks, energy economics and demand across process industries?
Get in touch with our Chemicals and process industries team to address the economic, operational and strategic forces reshaping the sector.
Get in touchStrategic Framework
Explore our Strategic Framework
Autonomous AI agents are changing how work is executed, enabling adaptive processes that respond intelligently to changing conditions instead of following predefined rules.
Discover our framework01. Map value chain
Assess feedstocks, production, intermediates, end markets, trade flows, assets, and industry economics
06. Track cycles
Monitor capacity, utilization, margins, feedstocks, trade, policy, and shifts in end-market demand
05. Define choices
Prioritize portfolio, asset, technology, footprint, sourcing, and market actions around structural economics
02. Trace drivers
Examine energy, raw materials, demand cycles, regulation, technology, capacity, and regional cost positions
03. Assess position
Evaluate asset base, product mix, cost curve, customer exposure, integration, and geographic footprint
04. Model scenarios
Test feedstock, energy, demand, regulation, trade, capacity, and decarbonization pathways
How we help
Support process-industry companies as they decide which assets, products and regions can remain competitive through a difficult industrial transition
We help leadership teams understand relative asset and portfolio economics, identify where capacity or cost positions are becoming structurally disadvantaged and assess opportunities for specialization, consolidation or growth. We can support portfolio strategy, restructuring, investment prioritization, operational transformation, feedstock and energy scenarios, geographic choices and decarbonization decisions, linking each to the underlying economics of plants, product chains and end markets rather than treating transition priorities independently.
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Chemical portfolio strategy
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Plant performance transformation
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Feedstock strategy
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Chemical margin optimization
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Process optimization
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Asset reliability transformation
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Chemical manufacturing network strategy
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Specialty chemicals growth strategy
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Commodity chemicals strategy
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Chemical supply chain resilience
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Chemical pricing strategy
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Energy-intensive operations strategy
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Chemical decarbonization
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Circular chemicals strategy
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Product stewardship strategy
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Chemical regulatory transition
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Process industry digitalization
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Chemical capacity investment
Explore our FAQs
Find answers to the most common questions about this service, including key features, processes, and practical considerations. Explore our FAQs for additional insights and guidance.
Feedstock, energy, utilization, product mix and regional supply-demand balances are central to industry economics.
Reassess asset competitiveness, product portfolios and market exposure rather than relying on utilization recovery alone.
When structural cost disadvantages or weak demand make acceptable returns unlikely across realistic market scenarios.
It changes feedstock economics, energy costs, process technology and demand for both legacy and lower-carbon products.
Performance, application knowledge and customer integration can matter more than scale and feedstock economics in specialty markets.
Compare emissions impact, technology maturity, energy requirements and economics across different policy and carbon-price scenarios.
Feedstock, energy, logistics, scale, regulation and proximity to customers collectively shape sustainable cost positions.
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