The global chemical
industry is poised for modest growth in 2013, according to a
report released Tuesday from global consultancy
Deloitte, with merger and acquisition (M&A) activity
likely to be a key factor in helping companies achieve top line
The growth comes despite challenges associated with energy
and feedstock volatility and regulatory
policies, the group noted.
According to the report from Deloitte Touche Tohmatsu
Ltd.'s (DTTL) global manufacturing industry group, the chemical
industry is experiencing a portfolio realignment, putting
increased pressure on companies to find new growth markets.
"We are looking at a market for 2013 and beyond where the
financial influences of globalization, China's market
maturation, and raw materials trends will position M&A as a
highly effective strategic tool," said Dan Schweller, M&A
leader for DTTL's global manufacturing industry group.
The report identifies multiple factors driving growth of
M&A activity around the world, particularly for North
America, Europe, and China, including new
markets, shale gas discoveries and progression of the advanced
materials systems industry.
This comes in spite of continued Eurozone concerns and
slow recovery in other mature markets.
In North America, chemical industry M&A activity has
undergone a dramatic shift and the upswing is expected to
continue, the report says. The recovery of the construction market, shale gas
availability and lower feedstock prices will likely play a
role in increased M&A activity in 2013.
The Deloitte report also predicts continued stamina for
top-chemical commodity producers to consider new facility expansion and to restart suspended
facilities in North America. Top
global chemical manufacturers are expected to invest more than
$40 billion in such projects over the next several
"The North American chemical industry is showing dramatic
change, attributable in part to favorable shale gas economics
supporting the petrochemical sector," said Duane
Dickson, global chemicals sector leader for DTTL.
"Companies that were looking to the Middle East and Asia for
M&A investments just a few years ago are now turning their
attention to growth opportunities in North America."
In Europe, the chemical industry is
among the most active sectors pursuing M&A opportunities,
the report finds. Companies with liquidity are making
acquisitions to transform their business and execute growth
Key drivers of this activity include strong balance sheets,
companies eager to build market positions in core areas,
continued portfolio realignment, and an increased focus on
international investments, especially in emerging markets.
A number of struggling companies, on the other hand, have
been focused on improving operational processes to increase
financial performance. In addition, some stressed companies are
forced to consolidate, a move driven by the disposal of
non-core assets to raise cash to reduce excess capacity and
"European chemical companies are cautiously optimistic as a
result of the current economic climate," said Dickson. "Many
are effectively using strategic growth plans and focusing on
better value-added products and less cyclical businesses. These
moves will likely help enable companies to be more agile for
the future and create prospects for sustainable profitable
For the year ahead, the Deloitte reports signals that China's
chemical sector will likely continue to grow, but at a slower
pace compared to the boom between 2000 and 2009.
Structural imbalances evidenced by overcapacity in certain
subsectors are factors likely to drive Chinese companies to
identify and fill market gaps, as they strategically pursue
M&A as a means to raise the future value of a company.
Overall, organic growth for the industry will likely be
modest, enabling M&A to play a prominent role in driving
growth in 2013. Global chemical companies are expected to place
a greater focus on realigning their portfolios and investments
to capture above average revenue growth and capitalize on new
For information on how to download a full copy of
the 2013 Global Chemical Industry Mergers and Acquisitions
Outlook, visit the Deloitte