According to a report from B&K Securities, the Indian chemical industry is poised to benefit from the ongoing challenges faced by Europe’s chemical sector. The report highlights that high operating costs in the European Union (EU27) have made production less competitive, opening up an opportunity for Indian chemical companies to expand their footprint in the region.
However, the report also cautions that this opportunity is not without its challenges. Chief among them are the competitive pressures from China and weakening demand in Europe. The report notes that while the struggles of the EU present an opening for Indian companies to gain market share, obstacles like Chinese predatory pricing remain significant. China’s dominance in global chemical markets and its ability to influence pricing often hampers Indian companies’ competitiveness, especially in the EU market.
Further complicating matters is the weak demand in Europe. The European Chemical Industry Council (CEFIC) has indicated a sluggish start to 2025, with EU27 chemical production expected to grow by less than 0.5% this year, down from a 2.5% growth in 2024. High gas prices in Europe, which are over three times more expensive than in the United States, have weakened the region’s manufacturing competitiveness, further impacting chemical production.
Despite these challenges, India remains a key trading partner for the EU27, ranking fifth in terms of chemical exports to the region. Indian chemical exports to the EU are valued at around €11.9 billion, representing a 2% share, while EU exports to India are valued at €6.0 billion.
While the struggles of European producers may offer Indian chemical companies an opportunity to fill the gap, their success will depend on two crucial factors: stabilizing demand in the EU and addressing pricing pressures from China. The report emphasizes that a sustained recovery in European demand is essential for Indian exports to grow in the long term. Until then, despite being well-positioned in the global market, Indian companies may find it challenging to fully capitalize on the situation.
