The chemicals industry—companies creating chemicals used in industrial, commercial, and a variety of other applications—thrived for many years leading up to and including the COVID-19 pandemic. However, a recent report by McKinsey & Co. shows that the period since the end of the pandemic has brought a sharp reversal of this trend, with chemicals companies as a group achieving growth of under 2% per year since late 2022 while global indexes have increased 24% per year over the same period.
Why the sudden and significant shift? Persistent inflation has been a major headwind for much of the period in question, alongside other factors, including high energy prices, changes in regulations, and an imbalance of production capacity and demand. As inflation mounted and while interest rates have risen, many of the industries most commonly making use of chemical products—consumer packaged goods, automotive, and more—saw growth slow or even reverse, stifling the demand for these products.
