Why it matters
The industry remains structurally oversupplied, particularly in commodity chains exposed to Chinese capacity growth. While disruption in the Middle East has temporarily shifted utilization and pricing in favor of some producers, it has not resolved excess capacity. Closure announcements may have revealed areas where value can no longer be defended, and mergers and acquisitions appear as though it is being used to improve cost position, integration, and strategic focus—not to simply increase scale. All in all, the industry appears to be shrinking undifferentiated, high-cost capacity while funding assets with stronger structural advantages.
What to expect in 2027
In 2027, chemical companies will likely move from managing broad portfolios to making strategic choices that bring focus to select parts of the business. Announced rationalization programs may continue to be translated into physical closures and permanent capacity reductions. Portfolio separations and sales to strategic or private equity buyers will likely continue, especially in segments where a business could perform better as part of a more focused or consolidated platform. M&A should remain selective, centered on assets with structural cost or market advantages. Due diligence may increasingly examine factors related to existing and potential tariffs, trade measures, customer relationships, feedstock relationships, and applicable regulatory requirements.
Rationalization can create value when it funds a sharper reinvestment strategy. Some companies have identified opportunities but lack the cash, staffing, or management capacity to pursue them all. Partnerships and selective capital commitments may therefore become more important, concentrating resources in assets with structural advantages.
Trend 3: From volume to value: Expanding into new, critical markets and applications
The chemical industry entered 2026 with uneven demand across traditional markets, but stronger activity in selected advanced manufacturing segments. Semiconductor-related gases, electronic materials, high-purity water, and fab infrastructure supported growth, while aerospace and space supported demand for specialty materials, helium, and hydrogen. Biopharma, cleanroom protection, data-center thermal management, and electric vehicle battery applications added momentum. At the same time, some companies appear to have become more selective about large, standalone hydrogen and energy-transition projects, prioritizing opportunities with clear customer commitments and more visible returns.
Why it matters
More than 80% of basic and specialty chemicals are purchased directly by industrial sectors, making the industry’s trajectory highly dependent on where industrial customers invest. In 2026, industrial sectors tied to semiconductors, aircraft, and pharmaceuticals grew more than most other traditional chemical end markets. An opportunity that emerged involved converting existing capabilities into higher-value positions: process-critical materials for chips, qualified materials for aerospace, and healthcare-grade chemistry for complex therapeutics.
What to expect in 2027
In 2027, chemical companies could continue reshaping portfolios toward advanced-manufacturing ecosystems (figure 4). Semiconductor fabs and advanced packaging facilities will likely continue to attract investment in high-purity and specialty gases, electronic chemicals, process-water treatment, hydrogen, and on-site supply systems. Companies could continue expanding capacity near major customer clusters in North America and Asia.
Industrial gases illustrate how customer-production economics can create relative resilience. Demand is linked to several industrial sectors, such as electronics, manufacturing, energy, metallurgy, and healthcare. Within these markets, high-purity gases and other specification-critical inputs can support premium economics because qualification requirements and production capabilities raise barriers to substitution.
The result will likely be a more focused industry—one that is less willing to add undifferentiated commodity volume and more willing to invest in resilient, high-value demand. However, these areas, too, are subject to volatility. Leaders could combine chemical expertise with infrastructure, applications engineering, and life-cycle service.
