Resilient Chemical industry faces an inflection point

Advanced chemistries and pure-play market participants outperformed in 2022. Demand decline and margin pressure cloud the outlook for 2023, but also present opportunities for improvement.

The chemicals industry emerged from a half-decade of disruption showing resilience and delivering robust financial results in 2022. COVID-19 shutdowns, supply chain challenges, and the Russia-Ukraine conflict fueled energy cost inflation and security concerns. Still, the fundamental chemicals business cycle expansion continued in 2022, with notable capacity expansions. In addition, demand continued to be strong, enabling companies to largely pass escalating costs on to customers.

AlixPartners expects 2023 to present a peak inflection point for the industry, with varied performance across its sub-segments. Challenges include degradation in demand, tightening feedstock-product margin spreads, and supply chain regionalization. Opportunities include raw material deflation, a shift towards sustainable product portfolios, and accelerating product innovation cycles. Commodity and integrated companies will be disproportionately affected.

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