The report below gives a good overview of the Fall 2026 M&A activity in the Chemicals and Plastics Industry Sector. The global chemical industry entered the third quarter of 2026 with annual sales near $5.0 trillion. Overcapacity, rather than weak demand, shaped the quarter, as new ethylene and polyethylene plants started up mainly in Asia. With demand growing only slowly, the extra supply kept operating rates and margins low, especially in basic plastics. Global production grew 3.8% in 2025 and is forecast to slow to about 2.0% in full-year 2026, widening the gap between regions. In the United States, output is forecast to grow about 0.5% in full-year 2026, with basic chemicals up 1.3% and specialty chemicals slightly lower. Cheap ethane gives U.S. producers a cost advantage, as feedstock is about three quarters of the cost of making ethylene. U.S. crackers run on ethane from shale gas, while most European and Asian crackers use naphtha. Naphtha comes from crude oil, so it costs more when oil prices are high. In Asia, China extended its lead in chemical production, with its output index reaching about 140 in the third quarter of 2026 against a 2021 base of 100. The country is also building most of the new global capacity due by 2027. Europe was under the most pressure of the three regions, with EU27 production down 2.0% between January and July. Capacity utilization rose only to 75.0% in the third quarter from 74.4% in the second, well below the long-term average above 81.0%. Chemical sales rose 2.1% in the same period, but the gain came mostly from producer prices rising 5.1% rather than from higher volumes. Export values fell 4.2%, and the trade surplus with countries outside the EU narrowed by $2.5 billion. The quarter pointed to a lasting change rather than a normal downturn, and margins will not recover until capacity closes, which takes years.
Posted by Andrew Baird.
Read the Entire Fall 2026 Chemicals and Plastics Report Here