Senior Risk Underwriter Angela Schulte offers an update on the Chemicals industry, specifically focusing on the plastics subsector.
Overall, both the Chemicals and Plastics industries are performing well as of 2024. Read on for the latest insights into demand levels, projected growth, and social concerns surrounding the industry.
Demand
In the Chemicals industry, we have witnessed contraction since the second half of 2023, a trend expected to persist through the first half of 2024, with an anticipated contraction of 0.8% this year. Much of this decrease in demand can be attributed to high inflation and monetary policies resulting in elevated interest rates, thereby creating challenging lending conditions.
In 2023, the Plastics industry experienced a growth rate of 1.2%, down from 2% in 2022. However, this moderated growth is expected to rebound in 2024, with more robust gains anticipated. The surge in demand for high-performance plastics such as polycarbonates and epoxies significantly contribute to driving growth in the plastics industry. This heightened demand stems from various end-use sectors including automotive, aerospace, and electronics, which rely on these materials for their operations.
Growth
Despite current challenges, the industry’s long-term outlook remains positive for 2024. The CHIPS and Science Act along with the Inflation Reduction Act will expedite technological advancements aimed at reducing emissions. Consequently, there will be an increased demand for chemicals utilized in manufacturing insulation materials, solar panels, and related products. Furthermore, the easing of interest rates will alleviate supply chain disruptions, thereby supporting the industry’s rebound. Notably, the plastics recycling sector is poised for significant growth, evident from substantial recent investments by virgin resin manufacturers in advanced recycling plants.
Looking For a FREE Quote?
Obtaining a free Trade Credit Insurance quote or just some more information is fast and easy! Get in touch with us today.
Get StartedSocial Concerns
As the demand for plastic goods rises, so do concerns regarding their environmental impact, accounting for 8% of global waste. To tackle this issue, investments have been directed towards innovative technologies and strategies such as recycling programs, reuse initiatives, and alternatives to conventional plastics. With a focus on sustainability, the plastics industry has witnessed an influx of investments aimed at enhancing production efficiency and precision.
It is projected that the plastics industry will continue its rapid growth trajectory in 2024, with organizations increasingly investing in sustainable practices to enhance profitability. However, concerns regarding plastic waste reduction, which garnered significant attention in 2023, are expected to intensify in 2024, leading to calls for decreased plastic production. This presents a significant challenge as plastics remain integral to global supply chains, despite efforts by companies to transition away from single-use plastics. Additionally, more than 80 global consumer packaged goods, packaging, and retail companies have committed to achieving 15% to 50% recycled content in their packaging by 2025.
Wrapping Up
While facing short-term challenges, the Chemicals and Plastics industries are poised for growth in 2024, driven by technological advancements, increased demand for high-performance plastics, and a growing emphasis on sustainability. Despite mounting concerns over environmental impact, proactive measures and industry commitments signal a promising future characterized by innovation and responsible practices. See how last year compared in our 2023 blog.