Moderate

Chemicals

The Brexit trade deal eased some uncertainty, however additional regulatory cost and industry overcapacity across Europe places pressures on operators.

Sector trends & challenges

  • Trade deal

    The Brexit trade deal announced in December 2020 removed much uncertainty across the sector, although duplication of regulatory costs will affect profitability.

  • Overcapacity

    Overcapacity across Europe continues to depress prices and margins.

  • Supply Chain Resilience

    Both chemicals manufacturers and their customers are looking to improve the resilience of their supply chains.

Sector rating profile

The sector has come under increasing strain over the past few years, as Brexit and capacity issues placed pressures on margins. The sector has responded effectively however, and we are seeing a gradual reduction in stress.

Chemicals

The chemicals sector continues to perform in a challenging economic environment.

Since the onset of the COVID-19 pandemic, there has been a significant amount of merger and acquisition (M&A) activity as cash-rich operators identify opportunities for consolidation and value-building. A number of manufacturers have also been able to both respond effectively to the operational challenges of COVID-safe workplaces and pivot production to support societal response.

The sector continues to suffer from structural over-capacity, however, which has led to sustained margin pressure and declining return on capital in recent years. Operators will need to continue identifying cost reductions, non-core disposal opportunities and strategic opportunities to remain both competitive and generate acceptable returns, particularly as compliance and regulatory costs increase under the duplication of REACH regulations across the UK and EU post-Brexit.

Environmental controls, both in Europe and across the rest of the world, will continue to be a strategic and operational priority for responsible operators.

Find Your Expert

James Fagan is Interpath Lead for ENR, which includes Chemicals as one of four core segments. James leads our approach to Chemicals nationally for Interpath, with support from Anthony Mayes and Kenny McKay. For a full list of our senior people with experience in the Chemicals sector use the button below.

Our senior team