Chemicals industry stabilising, but sharp rebound unlikely: Report

The global chemicals industry is stabilising after a downturn but a sharp rebound is unlikely, a 360 ONE Capital report finds. The outlook points to a gradual recovery in H2 2026, with agrochemicals and commodity chemicals showing improvement.

The global chemicals industry is showing signs of stabilisation after a prolonged downturn, though a sharp cyclical rebound remains unlikely in the near term, according to a report by 360 ONE Capital. The report said that while challenges such as geopolitical tensions, elevated feedstock costs and weak construction demand continue to weigh on the sector, industry participants are becoming increasingly optimistic about the recovery trajectory heading into the second half of 2026 and 2027. "Looking ahead, the industry outlook points to gradual recovery rather than a sharp cyclical rebound," the report said.

Agrochemicals Moving Out of Downturn

According to the report, agrochemicals appear to be moving out of a prolonged downturn, supported by improving volumes, healthy planted acreage and sustained grain demand. However, pricing pressure persists due to generic competition and oversupply, particularly from China. The report noted that "CY26 is broadly viewed as a transition year across Agrochemicals, with a more meaningful upturn anticipated in 2HCY26 and CY27."

Commodity Chemicals Poised for Improvement

Commodity chemicals are expected to benefit from tightening supply conditions triggered by disruptions in the Middle East. Supply chain normalisation is likely to remain slow, supporting a sustained improvement in prices across several chemical value chains. The report said commodity chemical markets "appear poised for a sustained period of pricing improvement given extended supply disruption timelines and structurally elevated feedstock costs."

Growth in Specialty Chemicals and Improved Sentiment

In specialty chemicals, demand linked to semiconductor materials, artificial intelligence infrastructure, aerospace, healthcare, water technologies, energy storage and electrification is expected to drive growth. Industry sentiment has improved from cautious stabilisation to measured optimism, although broad-based restocking remains absent. The report highlighted that customer inventory correction is largely complete and future volume growth is likely to remain consumption-driven rather than inventory-led.

Upcoming Iran-US Peace Deal a Key Event

The upcoming Iran-US peace agreement is expected to be a major near-term event for the industry. The report said, "the Iran-US peace deal, which is expected to be officially signed on 19 June 2026 (Friday), will remain a key event to watch due its potential implications for crude oil prices and, consequently, the broader chemical value chain."

Key Risks to Recovery

The report added that sustained geopolitical tensions, structural feedstock inflation and potential demand destruction arising from higher input costs remain key risks that could delay the pace of recovery across the chemicals sector.

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