Chemicals
The Chemicals industry is challenged by a combination of decreasing demand, supply chain risks, high energy costs, and climate challenges.
What drives the industry according to public sentiment?
The economic slow-down in Europe has led to decreased demand and a shift towards lower-value chemicals.
Unfavorable energy prices in DACH, which will remain on a higher level than in competing regions, impact the ability to export and influence investment decisions.
The bleak economic outlook suggests that demand will remain weak, particularly in the first half of 2024. Middle Eastern and North American players, which benefit from advantageous feedstock and energy prices, are expected to further intensify price competition.
Achieving climate neutrality remains a major challenge, as investments targeting a 55% reduction in emissions by 2030 are necessary for green transformation.
How business leaders can take position according to BCG experts?
The importance of enhanced market awareness has increased significantly during times of intense demand & supply dynamics. Consequently, the focus should be on a data-driven understanding of market volatility – especially to capture volume opportunities in a slowly recovering market. To support this approach, generative AI can aid in decision-making for capturing volume and pricing opportunities.
Evaluating the current portfolio and asset network from competitiveness perspective are essential to ensure sustained value creation. Unlike in previous crisis, the footprint and supply strategies require more radical changes as well as the level of integration. Stringent review of cost structures and processes - also by utilizing AI – is key to achieve next performance levels.
Sustainability must be integrated both operationally and within the portfolio. For instance, this can be achieved by substituting fossil-based feedstock with recycled or bio-based materials.