Chemical Industry Outlook 2026: Downcycle Persists, AI and Innovation Provide Some Relief
The Deloitte Research Center for Energy & Industrial recently released its 2026 Chemical Industry Outlook report. The chemical industry is expected to enter 2026 amid continued volatility, with global production growth forecast at 2% and U.S. output projected to decline 0.2%, according to the report. In addition, overcapacity, soft end-market demand, and geopolitical and trade uncertainty continue to pressure operating rates and margins.
According to Deloitte, chemical companies are responding by prioritizing cash flow, restructuring portfolios, and focusing on specialty chemicals for higher-margin opportunities. The report noted that cost control measures, including reduced operational and capital expenditures, are expected to continue supporting liquidity and production continuity.
End-market demand reportedly is uneven. While construction, automotive and consumer sectors face softness, Deloitte highlighted the semiconductor industry as a bright spot, driven by AI and data center growth. Investments in ultra-pure gases, solvents and other specialty materials are supporting next-generation chip manufacturing in the United States and Europe, according to the report.
The report also noted that AI and digital tools are increasingly deployed to optimize operations, improve safety, reduce energy consumption and accelerate R&D for faster commercialization of new materials. Companies that leverage these technologies while remaining flexible are positioned to navigate the current downcycle and capture growth opportunities once market stability returns, according to Deloitte.
The economic headwinds and market volatility described in Deloitte's outlook echo broader concerns raised by Martha Gilchrist Moore, the American Chemistry Council's chief economist and managing director, who characterized the business environment as a "confused sea state" during her mid-year update for Chemical Processing in June.
Moore detailed how tariff uncertainty, shifting global supply chains, and inconsistent trade policies are compounding the challenges facing chemical manufacturers—factors that directly contribute to the cautious spending, portfolio restructuring and margin pressures highlighted in the Deloitte report.
Understanding these interconnected economic forces is essential as the industry navigates what both Deloitte and the ACC characterize as a prolonged period of uncertainty and adjustment.
About the Author
Amanda Joshi
Managing Editor
Amanda Joshi has more than 18 years of experience in business-to-business publishing for both print and digital content. Before joining Chemical Processing, she worked with Manufacturing.net and Electrical Contracting Products. She’s a versatile, award-winning editor with experience in writing and editing technical content, executing marketing strategy, developing new products, attending industry events and developing customer relationships.
Amanda graduated from Northern Illinois University in 2001 with a B.A. in English and has been an English teacher. She lives in the Chicago suburbs with her husband and daughter, and their mini Aussiedoodle, Riley. In her rare spare time, she enjoys reading, tackling DIY projects, and horseback riding.
Traci Purdum
Editor-in-Chief
Traci Purdum, an award-winning business journalist with extensive experience covering manufacturing and management issues, is a graduate of the Kent State University School of Journalism and Mass Communication, Kent, Ohio, and an alumnus of the Wharton Seminar for Business Journalists, Wharton School of Business, University of Pennsylvania, Philadelphia.