Feature article - 2026 chemical industry outlook: Operational resilience & strategic discipline in a volatile market

Steve Ottley, managing director and head of chemicals and pharmaceutical at Maine Pointe, looks at some of the key challenges ahead this year

As 2026 opens, the chemical industry faces a market shaped by overcapacity, demand volatility, evolving global regulations and structural cost pressures. The landscape is markedly different from the years of post-pandemic tailwinds when pricing power and strong demand masked operational inefficiencies. Today, chemical producers are confronting a more nuanced reality: rising input costs, shifting customer expectations, geopolitical uncertainties and the growing continuously changing complexity of global trade.

For executives in the chemicals and pharmaceutical sectors, the imperative is clear: operational resilience and disciplined execution are no longer optional: they are prerequisites for sustainable profitability and growth. Understanding the lessons of the past year and applying them strategically will determine which companies emerge stronger in 2026. 

Market dynamics & structural pressures

Several macroeconomic and market trends have defined 2025 and will continue to influence 2026, notably: cost pressures and margin squeeze; geopolitical and trade uncertainty; and financial and operational complexity.

Raw material prices have remained volatile, influenced by both regional supply disruptions and global commodity cycles. Energy costs, particularly in regions heavily dependent on natural gas, continue to exert pressure on chemical production economics

Historically, chemical companies leveraged strong pricing power to offset such pressures. However, as end-market demand normalises, margin compression is more visible, and operational inefficiencies that were previously masked are coming into focus. Companies that fail to align production, procurement and logistics with cost discipline risk losing competitiveness even in stable end markets.

Trade policy shifts and tariffs, particularly across Asia, Europe and North America, continue to complicate supply chain planning. Producers must navigate a patchwork of regulations, border delays and fluctuating import and export costs. These challenges underscore the need for operational transparency and agility; organisations must be able to model multiple scenarios and respond quickly to mitigate financial and service risk. 

The last few years have shown that financial metrics alone can be misleading. Companies may report healthy EBITDA growth, but underlying inefficiencies—stranded inventory, deferred maintenance, or misaligned IT and ERP systems—can silently erode cash flow and operational resilience. For the chemicals sector, where high-value assets and complex manufacturing processes are the norm, these hidden costs can be particularly impactful.

Operational lessons from 2025

From a consulting perspective, the past year reinforced several critical operational lessons that chemical producers should internalise.

The first is that visibility is power. The most successful organisations in 2025 had real-time visibility across their operations, finance and supply chain. Understanding where materials, capital and labour are deployed allows companies to react quickly to disruptions. 

Those without this visibility faced delays, inefficiencies and unforeseen cost overruns. Digital twins of the end-to-end supply chain enable organisations to fully understand true landed costs and adapt networks to suit ever changing market demands.

For example, in a recent engagement, a client leveraged advanced analytics to process hundreds of thousands of procurement transactions across multiple supplier networks. While AI generated actionable insights on cost and supplier performance, human judgment was essential to interpret these findings, prioritise risks and implement operational changes. The result was improved working capital management, stronger supplier negotiations and measurable margin uplift, all within a few months.

Secondly, maintenance and asset management cannot be deferred. Deferred maintenance is often an invisible cost, silently undermining operational efficiency. Ageing equipment, underfunded repairs and neglected predictive maintenance can lead to unplanned downtime, higher energy usage and safety risks. Chemical producers with proactive asset management programmes fared better in 2025, avoiding unexpected interruptions and optimising throughput.

Finally, integration across functions drives performance. Siloed operations amplify hidden inefficiencies. In chemical plants, the disconnect between procurement, operations and finance can result in overstated inventory, production delays or misaligned service levels. 

Aligning these functions, not just technically but through cross-functional collaboration, is essential to capturing real operational and financial value. Agile sales, inventory and operations (SIOP) or IBP processes are essential prerequisites.

In one example, a multi-site speciality chemical manufacturer used AI to model production and distribution scenarios across its network. While the algorithms identified potential optimisations, human operators validated them against operational constraints, safety regulations and customer service priorities. The outcome: better alignment between inventory, capacity and demand, generating both cost savings and service improvements.

Looking ahead to 2026: Priorities for leadership

Chemical executives entering 2026 should focus on three interrelated priorities: operational discipline, scenario planning and strategic agility. The era of relying on favourable market conditions to mask inefficiencies is ending. Companies must implement rigorous operational discipline across:

• Procurement and supplier management: Avoid overstocking and ensure supplier reliability
• Asset and maintenance planning: Reduce risk of downtime and extend equipment life
• Systems and process alignment: Ensure finance, operations, and supply chain systems communicate in real time.

Discipline in these areas not only protects margins but also strengthens investor confidence and creates capacity for strategic growth initiatives

Volatility is no longer occasional; it is constant. Scenario planning should be embedded into decision-making processes. Companies must stress-test supply chain disruptions, tariff fluctuations and energy price spikes to identify vulnerabilities before they affect operations or the bottom line.

For example, a chemical logistics network was analysed using AI to simulate hundreds of distribution scenarios, including port delays, demand surges, and energy price increases. Human planners then prioritised strategies that were feasible operationally and financially. This approach allowed the company to mitigate risk, reduce working capital needs, and maintain service levels despite external shocks.

Finally, operational discipline and scenario planning only deliver value if they are linked to strategic agility. Chemical producers must align operational insight with long-term investments, M&A opportunities and innovation initiatives. Executives who integrate operational intelligence into strategic planning will be better positioned to capitalise on market opportunities, negotiate favourable contracts and sustain competitive advantage.

Role of AI & human expertise

Advanced analytics and AI are powerful tools for chemical companies, but they are not replacements for human judgment. AI accelerates the identification of trends, anomalies, and optimisation opportunities. Human expertise ensures that these insights are interpreted in context, considering safety, regulatory compliance, market dynamics and strategic priorities.

In one example, a pharmaceutical chemical manufacturer integrated AI forecasting into its sales and operations planning. The system predicted regional demand fluctuations, but human planners accounted for plant maintenance schedules, regulatory constraints and supplier reliability. The combination of AI and human expertise allowed the company to optimise production, reduce inventory costs, and improve service reliability, an approach that can be applied broadly to operational diligence and M&A evaluation.

Key takeaways for 2026

1. Visibility and integration are critical: Align operations, finance and supply chain systems for real-time insight and faster decision-making
2. Operational discipline protects margins: Rigorous management of assets, maintenance, and processes mitigates hidden risks and supports profitability
3. Scenario planning enables agility: Stress-test assumptions and prepare for volatility before it impacts performance
4. Human + AI drives better outcomes: Combine analytical speed with judgment and expertise to translate insights into actionable strategies

Chemical producers and investors who internalise these lessons will enter 2026 not only resilient to volatility but also positioned to capture value where competitors may falter. Operational rigour, informed by intelligent systems and human oversight, will be a defining competitive advantage in the year ahead.

Contact:

Steve Ottley

Managing Director & Head of Chemicals & Pharmaceutical

Maine Pointe 

[email protected].