“Chemicals is a large, aggressive, and growth-oriented industry. The recent boom in the chemicals sector was fuelled by increased pharmaceutical demand. There is definitely possibility for greater expansion and consolidation in this industry, especially in emerging markets, because there are so many participants.”

The chemical industry began to consolidate in the 1990s, affecting developed countries. The emergence of agrichemical companies in India in the 2000s was aided by rising demand. The chemicals industry was dominated by three major businesses by 2014, i.e., Syngenta, Bayer and BASF. In the crop protection industry, these companies controlled 60% of the market.

When we talk about segment consolidation, we're talking about increasing market share in the few categories where the player perceives the most value. According to a report by Boston Consulting Group (BCG), the rate of consolidation is quickening, altering several chemical industries as companies seek to focus their portfolios and improve their business models.

The degree of consolidation in the various chemical industries now varies significantly. Some agrochemical businesses, for example, are incentivized to merge in order to obtain scale and cut costs. The volume of deals in specialised chemicals is expected to stay strong.

Mergers and Acquisitions (M&A) are becoming a difficult business for most businesses in an economy that is negatively fluctuating on a daily basis. And the chemical sector has always engaged in M&As to expand its company and market, adapt its tactics, and bring together all of the segments in which it operates. So, what does this mean for chemical businesses in the face of a collapsing economy that refuses to help them along the way?

Read More :- https://www.pukkapartners.com/insight/chemical-industry-moving-towards-market-consolidation

Major Highlights of Global Chemical Industry Disruptions

The chemical industry has long had to cope with the inherent risk of its principal feedstock supply coming from the Middle East, so dealing with trade and geopolitical risks is nothing new. However, it appears that some geopolitical events were more acute in 2019, and trade tensions increased. We observed the following in 2019 and early 2020:

Trade tensions between China and the United States have risen, with both countries imposing substantial tariffs on a range of chemical products.
The attack on Saudi Arabia's oil distribution and refining facilities in September disrupted supplies of critical chemical feedstocks.
Quality Circular Polymers, a joint venture between LyondellBasell and SUEZ to turn post-consumer plastic into high-quality polypropylene.
Eastman Chemical's collaboration with Circular Polymers to reclaim and recycle post-consumer carpeting into feedstocks for Eastman's products.
Outbound M&A by UK corporations was also visible, albeit at a much lower level than in 2018, with deal volumes down by more than half year on year, indicating prudence in the face of Brexit uncertainty. Expanding geographical footprints and increasing exposure to growth end-markets were among the methods used by companies travelling abroad, as were accessing higher-margin products and solving product portfolio gaps.
The majority of transactions, as in previous years, were driven by strategic actors seeking to improve or sustain portfolio value by acquiring new skills or divesting noncore assets. German chemical businesses were primarily focused on developing novel, unique technologies that would boost profit and growth in the coming years.


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