Global chemical industry seen on gradual recovery path; Iran-US peace deal key catalyst: Report
New Delhi, June 18
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.
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 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."
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.
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."
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.
— ANI
Reader Comments
Interesting analysis. The Iran-US peace deal could really change crude prices, which is huge for us since we import most of our oil. A stable peace might lower costs for petrochemicals eventually. Fingers crossed for June 19 🤞
While the recovery is welcome, I’m skeptical about the ‘gradual’ timeline. Our MSME chemical units are struggling with high electricity costs and raw material prices. The government should ensure that domestic production gets adequate support before imports from China flood the market again. Better to be self-reliant.
As someone working in specialty chemicals, I can attest that the AI and semiconductor demand is real. There’s a lot of optimism in our R&D labs. But we need more investment in infrastructure to really capitalize on this. The next 2-3 years could be a turning point if planned well.
I’m hoping this recovery also means more jobs for freshers in the chemical sector. We have so many bright students coming out of IITs and NITs—they need opportunities in agrochemicals and pharma intermediates. Let’s not just be suppliers of raw materials; let’s move up the value chain! 🇮🇳
The report’s warning about geopolitical tensions is spot on. Trade wars and supply chain disruptions can undo any progress quickly. India should focus on diversifying its chemical sourcing beyond China and the Middle East. Maybe Southeast or even domestic alternatives?
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