Blog — May 29, 2026
Demand conditions improve in chemicals sector in April 2026
Nonetheless, sector hit hard by war-related spike in cost pressures
Recent data from S&P Global Market Intelligence indicated a notable shift in the near-term outlook for the chemicals industry in April 2026. Global demand for chemicals and chemical-related products showed signs of strengthening, driven by increased new orders and a faster pace of production growth. However, the overall environment remains complex, with rising costs and geopolitical uncertainties tempering optimism.
The ongoing conflict in the Middle East has significantly impacted the sector, leading to soaring raw material and energy prices. While demand has temporarily surged due to precautionary stockpiling, the sector faces persistent challenges from supply chain disruptions and heightened cost pressures.
PMI data signals uptick in global chemicals sector performance
April’s PMI® data points to a robust increase in new orders across the global chemicals sector, following a return to growth in March. Both domestic and international markets contributed to this uptick, with manufacturers reporting a rise in export sales at the start of Q2. The growth in new business was the strongest in over four years, supporting a quicker increase in production.
Several survey respondents highlighted increased demand for products related to oil, gas, and plastics, driven by fears of supply shortages and safety stockpiling amid geopolitical tensions. This trend was evident across multiple manufacturing PMI surveys, as customers sought to preempt further price hikes and mitigate supply chain risks. European respondents, in particular, emphasized efforts to diversify supply sources to reduce vulnerability to disruptions.
Regionally, the trends seen in Europe and Asia aligned broadly with those at the global level, where demand growth was evident. Asia’s expansion in new sales outpaced the global average, while Europe’s expansion remained steady from March. In the United States, the Basic Materials sector, including chemicals, signaled a renewed upturn, although lower export sales continued to weigh on overall new orders.
CIS forecasts indicate structural challenges in the chemicals sector to persist
Looking ahead, CIS forecasts suggest that the sector will face ongoing structural challenges. Combining PMI insights with long-term industry forecasts, we see a more cautious outlook for the coming years.
Global production of chemicals and related products is expected to slow in 2026, with an estimated growth rate of 2.9%. While Asia-Pacific—particularly mainland China, India, Indonesia, and South Korea—is expected to see continued growth, oversupply concerns are likely to temper gains elsewhere.
European markets are anticipated to experience modest growth, as capacity reductions and restructuring efforts aim to align supply with softer demand. North America, which experienced rapid growth in 2023, is forecast to contract by 1.4% in 2026, reflecting ongoing oversupply and capacity adjustments.
Despite the industry’s concentration remaining largely in China over the next decade, the United States will continue to be a major player, ranking as the second-largest producer globally.
Key takeaways
The key takeaway is that while demand conditions improved in April, the chemicals sector faces significant headwinds from geopolitical tensions, inflation, and supply chain disruptions. These factors are reshaping the industry’s near- and medium-term outlook.
Understanding these dynamics is crucial for market participants, investors, and policymakers. Our comprehensive analysis offers insights into regional differences, structural challenges, and the potential pathways forward for the chemicals industry.
For a deeper dive into the data, forecasts, and strategic implications for the chemicals sector, download the full report.
Content Type
Theme
Language