Fitch Ratings has maintained a deteriorating outlook for the global chemicals sector as the industry heads into 2026, reflecting persistent structural imbalances and weak market conditions. A key challenge is continued oversupply in several major chemical segments, particularly petrochemicals such as ethylene and polyolefins. Significant new capacity additions—especially in China—are expected to outpace demand growth, even as some production facilities are rationalized or closed in other regions. This imbalance is likely to keep pricing weak and margins under sustained pressure.
Demand conditions remain uneven across regions and end markets. North America is expected to see subdued demand due to slow activity in construction, automotive, and consumer goods. Europe faces similar headwinds, compounded by high costs and increasing competition from lower-cost imports. While certain specialty areas such as pharmaceuticals, electronics, and packaging may show pockets of resilience, overall demand growth is unlikely to be strong enough to absorb excess capacity in the near term.
In response, chemical producers are increasingly prioritizing liquidity management and capital discipline. Companies are focused on preserving cash through cost-cutting measures, reduced capital expenditure, asset sales, and tighter working capital controls. Strategic flexibility is becoming more important as firms navigate prolonged earnings pressure.
These conditions are expected to weigh on investment and M&A activity in 2026. Large-scale expansion projects are likely to be deferred, while acquisitions will be more selective and value-driven. Any investment activity will focus on strengthening competitive positions, improving cost efficiency, or stabilizing cash flows rather than pursuing aggressive growth.
https://in.tradingview.com/news/reuters.com%2C2025-12-15%3Anewsml_FIT2bS7mb%3A0-fitch-ratings-maintains-deteriorating-outlook-for-global-chemicals-on-overcapacity/
