The global chemical industry has been growing at a steady pace over the past few years and this trend is expected to continue in 2022. The key factor that contributes to this growth is the increased investments in R&D, strategic mergers & acquisitions, and the increase in technical expertise required for new product development & commercialization. There will be an increased demand from emerging markets of Asia Pacific, Latin America, and the Middle East & Africa due to the rapid growth of their economies, rising population, and increasing per capita consumption of various chemical products such as pharmaceuticals, petrochemicals, plastics, agrochemicals, etc.
Since the beginning of the COVID-19 epidemic, chemical manufacturers have faced an ever-changing set of obstacles, including plant shutdowns and movement restrictions, shipping and transportation delays, raw material shortages, and more.
Many of these issues have been met by chemical companies. Production and spending increased in the worldwide chemical sector in 2021, but there is still a lot of uncertainty ahead.
The Future of the Chemical Industry
A lot is expected from the chemical industry in the coming years. The chemical industry is projected to witness robust growth across all business verticals, especially health and pharmaceutical; energy, utilities and transportation; and consumer goods and packaging. Below are some interesting insights on how the business trend will shape up for the chemical industry over the next 5 years:
(1) Price pressure will increase due to increasing competition and growing demand for environmentally friendly products as well as a greater need for energy efficiency.
(2) Implementation of new technologies and processes, such as those that use renewable resources instead of fossil fuels, should give a significant boost to chemical companies going forward.
(3) Greater regulatory compliance around emissions limits for greenhouse gases and pollutants has put an added impetus on reducing process emission levels through technological advancements – an area where chemical manufacturers have been investing heavily. By doing so, they can ultimately look forward to more business opportunities arising down the line. While global chemical consumption grew at a CAGR of 2.9% during 2010-2015, it is forecasted to grow at 3.0% during 2015-2020, with Europe representing more than one quarter of overall consumption and North America being another major contributor at around 20%. Looking further ahead, Asia Pacific is anticipated to emerge as a key driver for growth among various geographies globally by 2020.
Fig 1: Global Chemicals Outlook
New Technologies Reshaping the Chemical Industry
Before taking any steps towards innovation and growth, it is important for a chemical company to look at new technologies that will emerge over the next few years. New technologies are already emerging that will change the business landscape for years.
Some key technologies which have shown significant potential include
- Advanced analytics
- Big data processing
- The internet of things (IoT)
- Augmented reality, and virtual reality
Key Trends Transforming the Chemical Industry
As the chemical industry enters the year 2022, strong demand for both commodity and specialty chemicals should keep prices stable. The industry should also see higher capital investment as top industry players focus on expanding capacity and entering growing end markets via both organic and inorganic means. However, the industry may suffer margin pressures as raw material costs continue to rise through the first half of 2022.
Sustainability Development will most likely be a significant area of concentration for most US chemical businesses in 2022. Many chemical businesses are expected to boost their investment in research and development (R&D) skills and to capitalize on improvements in technologies
Innovations and trends like Shifting demand, Digital Transformation, Big Data, green chemistry, and sustainable development are transforming our chemical industry. Some of these trends will shape how we manage chemicals and materials; others will transform chemical product development. Here is a sneak peek into what to expect over the next 5 years.
Key Takeaways
The global chemical industry is an immense market encompassing a variety of sectors, from basic chemicals to complex specialty chemicals. The global chemical industry’s growth can be attributed to a growing population and increased demand for quality products across all sectors. However, it remains sensitive to economic conditions and faces a few major obstacles on its way toward continued business growth.
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