Chemical industry poised for gradual demand recovery in 2025

The global chemical industry expects a slow and steady recovery in demand driven by volume growth, while pricing remains weak, reveals a recent report by B&K Research. While inventory destocking ended in most sectors by 2024, agrochemicals still face some challenges. India’s chemical sector may benefit, but overall growth is expected to remain limited by pricing pressures.

A recent report by B&K Research forecasts a slow and gradual recovery in global chemical industry demand during 2025, even under optimistic scenarios. In 2024, the industry saw some improvement in volumes across chemical, specialty chemical, and agrochemical segments. However, overall performance remained modest, and companies are approaching 2025 with cautious optimism.

Growth in 2024 was largely volume-driven, with pricing trends staying weak across most segments. This indicates that the recovery was not broad-based and that price pressure continues to impact revenues. A significant positive development in 2024 was the conclusion of the long inventory destocking phase in the chemicals and specialty chemicals sectors. This phase had earlier suppressed demand and clouded sales visibility. With destocking largely ending by late 2024, companies in these sectors reported year-on-year volume growth.

On the other hand, the agrochemical sector continues to deal with inventory-related challenges. Although the burden of excess stock has eased significantly, it still poses some constraints. Despite this, agrochemical companies were able to achieve volume growth in 2024 while navigating a difficult pricing environment, especially due to low farm product prices.

The outlook for 2025 remains mixed. While some companies are optimistic about demand recovery, others remain wary. Even among those with a positive outlook, expectations are for a slow and steady increase in demand. Agrochemical companies anticipate continued volume growth in 2025 as inventories further normalize, but low commodity prices and pricing pressure could weigh on profitability.

The report also notes that any global volume recovery across chemicals, specialty chemicals, and agrochemicals is expected to positively impact the Indian chemical sector. However, this growth is likely to be volume-led rather than driven by price increases, unless influenced by recent tariff changes.