Hunker down or reset? Rethinking strategy in the chemicals industry

By Pedro Caruso, Robert Henske, Juan Trebino, Alexander Baumgartner and Brag Selvarajan

The global chemicals industry faces its most difficult challenge in decades. Structural changes—including China’s excess capacity, Europe’s rising costs, and US tariff uncertainties—have created a "perfect storm" for leaders. Traditional cost-cutting strategies may no longer be sufficient. Leaders must now decide: Should we keep enduring these conditions, or is a complete reset necessary?

The challenge: A new industry paradigm

For nearly 20 years, chemicals outpaced the S&P 500. That trend has now reversed. Since 2023, global excess capacity and declining demand have transformed competitiveness across regions.

• China has surged, producing well beyond domestic demand.
• Europe is at the high end of global cost curves due to energy and feedstock prices.
• The US faces tariff exposure and demand headwinds.

The result: structural disadvantages that won’t fade with the next cycle.

Strategic choices: Hunker down or reset

Executives today must evaluate whether to:

• Hunker down – doubling down on cost discipline, efficiency, and incremental improvements to weather the cycle.
• Reset – rethinking the portfolio, rationalizing assets, restructuring operations, and redefining participation in key areas markets.

In practice, almost all companies will need a combination of both approaches. Leaders must act quickly, identifying which parts of their business can weather the storm and which need transformation.

Our perspective

At Roland Berger, we assist chemical industry leaders in making vital decisions. From boosting performance programs to portfolio rationalization and restructuring, we collaborate with companies to stabilize now and prepare for the future.

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