The chemical industry will continue to undergo a paradigm shift in the coming years. Chemical companies need to quickly embrace this transition to maintain a competitive advantage, resolve obstacles, and open up new business opportunities.

This article identifies three major trends in the chemical industry.

Sustainability and Circular Economy Essential raw materials and energy sources are getting tighter each day. The ever-increasing effects of pollution and waste disposal have prompted authorities to impose stringent environmental regulations.

Global chemical companies are now functioning as habitats that ensure sustainability and economy, resulting in less energy and resource use. The crucial nodes of these ecosystems—raw materials, chemical processing, implementations, and end-users— focus on replacing raw materials. They optimize the usage of renewables, energy recovery, recycling, and re-use by end-users to realize a circular economy, thus optimizing value and conserving resources. A few examples are discussed below:

Bio-based plastics: While drop-in or bio-based plastics are not compostable or biodegradable, they are entirely recyclable and are engineered to “drop-in” into current recycling systems without compromising the quality and raising the cost of the recycling stream.

Battery material recycling: the market for recycling battery materials is expected to be driven by an increase in electric cars’ adoption and growing recycling regulations.


Digitalization is driving innovation in all major industries, and chemicals are not too far behind the power of digitalization and its role in innovation. Digital technologies will benefit chemical industries in many ways, such as collecting critical data, drawing insights into better performance at a reduced cost, scheduling preventive maintenance to minimize downtime, and enabling accurate inventory planning to prevent stockouts.

Innovation and Accelerated Globalization

Demand for chemicals continues to rise in emerging markets, as their working-age population is still an influencing factor driving the chemical industry. The declining product life cycles and the drive to commoditize goods have accelerated the pace of globalization.

All three trends converge to challenge the chemical industry and influence the world’s leading chemical companies’ strategic decisionmaking process. Agile and early adopters of these changes may have a competitive advantage over others, as conventional strengths such as easy access to raw materials, proximity to consumers, and R&D will no longer be essential to sustain a competitive edge.