Chemicals 2015 Chemicals 2035: The 5,600-Billion-Race is On

Author / Editor: Dominik Stephan* / Dominik Stephan

5,600 billion Euros is the ultimate Grand Prix for chemicals. But the winner is by no means identified — The chemical industry experienced above-average growth globally. With this development, chemical companies could pocket 5,600 billion Euros per year till 2035. But the global distribution is not equal: The North American market is growing strongly whereas the market in Europe has stagnated. The consequence: The significance of the old continent could get marginalized for this industry. There is still time to change course.

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The race is on: Analysts at Roland Berger believe that the worldwide chemical industry will grow by an average of 3.6?% per year on till 2035. This figure is considerably more than the expected rise in the worldwide gross national product over the same period. And growth means value: Till 2035 the global chemical market could grow to 5,600 billion Euros. The preparations for the race will start soon: After all, one has to act swift to cash in on the rapid development. The growth curve is visibly flattening already (from today’s 4.1?% per year to about 3.4?% in 2030).

But where to invest? And how to react? One thing is clear. The distribution of growth is not equal. Asia and North America are expecting strong developments, the European chemical industry in contrast is not making any progress. Experts confirmed that in the next twenty years not more than 1.5?% growth can be expected compared to 2015.

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Internationally, European companies find themselves in an uncomfortable predicament between the booming economies in Far East and the cheap raw materials from North America. And the sluggish EU domestic market with its saturated markets and the persistent strain from the debt crisis will not help the cause.

The Inevitable Consequence

“Even though European chemical companies show high productivity and are very innovative, the market has been consolidating for years”, explains Martin Erharter, Partner of Roland Berger. “Issues such as the increasing digitization and new customer requirements are putting more and more pressure on the chemical industry.”

The inevitable consequence: The old world is no longer the driving force of the chemical industry. If countermeasures are not taken, it will remain a mere bench player. Around the turn of the millennium, about one third of the worldwide chemical production came from Europe?—?a value that sunk to only 19?%, still almost one fifth of the global market, today. However, even this share has been shrinking rapidly. Analysts fear that Europe’s portion in the world’s chemical industry could decline to 13?% by 2035. Asia will emerge as the big winner. With booming markets in China and India and a growing middle class with income and purchasing power, the Far East has already crossed the magical 50?%-mark in 2015. By 2035, 62?% of all chemicals may come from Asia, estimates Roland Berger.

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