The logistics of the chemicals industry, including industrial gases in places, is increasingly threatened by the ongoing impact of the Middle East war, and could prompt a rethink about supply chains that creates new investment opportunities.
The assessment comes from analyst group ICIS – the Independent Commodity Intelligence Services, presenting on a call earlier this week. As global trade routes face mounting disruptions and transportation risks surge, the fragility of cross-border chemical supply networks has been laid bare, forcing producers, traders and investors to reassess long-established operational models.
But for some the upheaval could even be positive for a while, noted ICIS speakers, with the high-cost European chemicals industry potentially more competitive and less pressured, given the higher costs that are now attaching to many staple chemical outputs. Sustained supply chain tensions have driven up global shipping, energy and raw material expenses, narrowing the cost gap between European producers and their international rivals, and easing the intense competitive pressure that has plagued the sector for years.
Will Beacham, an ICIS journalist writing on chemicals, said, “The war could trigger an abrupt about-turn for the fortunes of Europe’s beleaguered chemical industry, even if it is a temporary one. It is a high-cost region, and global overcapacity has triggered a huge wave of production capacity closures [across Europe]. ICIS estimates that since 2022 24 million tonnes of capacity has either been closed or gone under review for shutdown or sale in Europe.”
He added that the shifting supply chain landscape is now acting as an unexpected buffer for European manufacturers. With longer transit times, tighter logistics constraints and rising global production costs, the region’s chemical facilities are regaining some of their lost competitiveness. This shift is not only slowing the pace of capacity cuts but also opening avenues for targeted investment in supply chain resilience, localised production and innovative logistics solutions across the global chemicals sector.
ICIS analysts emphasised that while short-term market volatility persists, the structural reorganisation of supply chains will bring long-term strategic opportunities. Businesses that prioritise supply chain flexibility, regional diversification and sustainable production are poised to benefit from the industry’s evolving landscape, turning supply chain vulnerabilities into sustainable competitive advantages.
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