The global chemical market is expected to more than double from its current €2.3 trillion to €5.6 trillion in 2035, research from Roland Berger finds. The market share is projected to shift further away from Europe and North America to Asia, which will see its share of chemical sales rise to 62% by 2035. Europe, while growing in real term, is seeing its once dominant position fall back, even while it continues to hold considerable R&D lab potential.
The global chemical industry has seen steady growth over the past decade with high demand emanating from Asia, where chemical sales have risen from 32% of total sales in 2000 to 53% expected by the end of 2015. The total chemical market is today worth €2,300 billion, although it is expected to grow rapidly recent research from Roland Berger finds. The consulting firm, in its report ‘Chemicals 2035 - Gearing for Growth’, explores changes in the dynamics of the chemical market over the coming 20 years and its forecast growth.
According to Roland Berger, the global chemical industry is expected to outgrow the increase in GDP and reach €5,600 billion by 2035. The firm projects the growth rate of the market at be 4.1% annually between now and 2020, before attaining a rate of 3.6% between 2030 and 2035. While the slowdown in the Chinese economy has seen the regions high demand and growth in chemicals slow, the long term projection still finds that the region will continue to pick up market share, with an expected market share of 62% in 2035.
Europe runs out of steam
While Asia has been doing well on the back of high demand for its rapid expansion, Europe has seen its once dominant position deteriorate over the past decade, down from a dominant 33% of the total market in 2000 to 19% today, with further deterioration expected between now and 2035 when it is expected to drop to 13%.
Besides the massive strides made by Asia as it nearly doubles its market position, Latin America and the rest of the world are also expected to see their position strengthen, up 1% and 2% on 2000 levels. North America is looking toward tumbling growth figures as its position from 27% of the market in 2000 falls to 18% today, to reach 14% in 2035.
While Europe’s market share is expected to fall, in absolute terms the region will continue to see modest growth of 1.5% annually, with much of the market growth in the downstream, higher-value-added segments such as agrochemicals and engineering plastics. The region is still facing some stiff competition from outside the region, with imports now outstripping exports, and with Europe having one of the highest plant closure rates, which peaked at 71.4% of global shutdowns in spring 2011. The consultancy does however highlight that it is not all bad news for Europe’s chemical industry. The region still has highly sophisticated and productive chemical plants in which world class R&D continues to take place.
Alexander Belderok, Partner at Roland Berger Strategy Consultants, concludes: “Even though European chemical companies are highly productive and very innovative, the market has been consolidating for years, especially in Europe. Major topics like the growing digitisation of industry and new customer demands are placing chemical concerns under ever-increasing pressure.”