The industrial sector consumes more than 80% of basic and specialty chemicals. Worldwide, industrial activity saw a modest recovery in 2024. Global industrial production is expected to have increased by 1.3% by the end of 2024, with predictions of about 2.6% growth in 2025. These findings are according to the American Chemistry Council (ACC; Washington, D.C.; americanchemistry.com) [1].
The demand for chemicals remained weak in 2024, even though the destocking cycle that resulted from the pandemic-related high inventories from a few years ago has essentially ended. Two important end-use markets for chemistry products are automobiles and housing. An average car in North America contains more than $4,400 of chemistry products, including 426 lb of plastics and composites; and an average single-family home contains about 33,000 lb of chemistry products. Both markets faced challenges in 2024 as the cost for automobile ownership escalated and the housing market struggled. Both are expected to improve in 2025 as interest rates fall in the U.S. [1]
Growth areas
Capital spending rose 4.1% to $34 billion in 2024 and is expected to grow another 2.9% in 2025 [1]. Strong growth areas were new investments in chemicals for the semiconductor and electronics industries, battery development and other sustainability-related areas. In the U.S., government funding resulting from legislation, such as the Inflation Reduction Act (IRA), the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act have driven investments in these sectors.
The semiconductor industry surge is driven by increased demands for computing and data storage (datacenters) and electronics, resulting from increased use of machine learning, artificial intelligence (AI), wireless communication, autonomous driving, electric vehicles and more. The ACC says that manufacture of semiconductors requires about 500 different process chemicals.
In a recent report [2], McKinsey Global Institute identified semiconductors, along with batteries, electric vehicles, robotics, biotechnology and 13 other industries with high growth potential, as arenas that have the potential to significantly affect the global economy.
Looking ahead
In its 2025 Chemical Industry Outlook [3], Deloitte highlights five trends that may help industry leaders plan for the coming years, including a look at cost efficiency, end markets, innovation, sustainability and supply chains.
The ACC projects a positive long-term outlook for the U.S. chemical industry. The U.S. continues to maintain a production advantage due to feedstocks from natural gas, and trade remains vital to the industry, which continues to maintain a trade surplus. Risks include uncertainties around geopolitical conflicts, trade disruptions, regulatory impacts and unexpected events, such as from extreme weather. ■
Dorothy Lozowski
Dorothy Lozowski, Editorial Director
1. American Chemistry Council, Chemical Production Steady Amid Weak Recovery in Key End-Use Markets, ACC Year-End Situation & Outlook 2024.
Business & Economics
CPI Outlook for 2025
| By Dorothy Lozowski
The industrial sector consumes more than 80% of basic and specialty chemicals. Worldwide, industrial activity saw a modest recovery in 2024. Global industrial production is expected to have increased by 1.3% by the end of 2024, with predictions of about 2.6% growth in 2025. These findings are according to the American Chemistry Council (ACC; Washington, D.C.; americanchemistry.com) [1].
The demand for chemicals remained weak in 2024, even though the destocking cycle that resulted from the pandemic-related high inventories from a few years ago has essentially ended. Two important end-use markets for chemistry products are automobiles and housing. An average car in North America contains more than $4,400 of chemistry products, including 426 lb of plastics and composites; and an average single-family home contains about 33,000 lb of chemistry products. Both markets faced challenges in 2024 as the cost for automobile ownership escalated and the housing market struggled. Both are expected to improve in 2025 as interest rates fall in the U.S. [1]
Growth areas
Capital spending rose 4.1% to $34 billion in 2024 and is expected to grow another 2.9% in 2025 [1]. Strong growth areas were new investments in chemicals for the semiconductor and electronics industries, battery development and other sustainability-related areas. In the U.S., government funding resulting from legislation, such as the Inflation Reduction Act (IRA), the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act have driven investments in these sectors.
The semiconductor industry surge is driven by increased demands for computing and data storage (datacenters) and electronics, resulting from increased use of machine learning, artificial intelligence (AI), wireless communication, autonomous driving, electric vehicles and more. The ACC says that manufacture of semiconductors requires about 500 different process chemicals.
In a recent report [2], McKinsey Global Institute identified semiconductors, along with batteries, electric vehicles, robotics, biotechnology and 13 other industries with high growth potential, as arenas that have the potential to significantly affect the global economy.
Looking ahead
In its 2025 Chemical Industry Outlook [3], Deloitte highlights five trends that may help industry leaders plan for the coming years, including a look at cost efficiency, end markets, innovation, sustainability and supply chains.
The ACC projects a positive long-term outlook for the U.S. chemical industry. The U.S. continues to maintain a production advantage due to feedstocks from natural gas, and trade remains vital to the industry, which continues to maintain a trade surplus. Risks include uncertainties around geopolitical conflicts, trade disruptions, regulatory impacts and unexpected events, such as from extreme weather. ■
Dorothy Lozowski
Dorothy Lozowski, Editorial Director
1. American Chemistry Council, Chemical Production Steady Amid Weak Recovery in Key End-Use Markets, ACC Year-End Situation & Outlook 2024.
2. McKinsey Global Institute, The Next Big Arenas of Competition, Oct. 23, 2024, www.mckinsey.com/mgi/our-research/the-next-big-arenas-of-competition.
3. Deloitte Research Center for Energy & Industrials, 2025 Chemical Industry Outlook, Nov. 4, 2024, www2.deloitte.com/us/en/insights/industry/oil-and-gas/chemical-industry-outlook.html.