For nearly two decades, the chemical sector consistently delivered higher total shareholder returns than the broader market. That trend has reversed, as the sector’s compound annual growth rate for total shareholder return has turned negative, significantly underperforming the MSCI World Index, note Partner Obi Ezekoye and coauthors. To navigate the challenging environment and a sustained supply–demand imbalance, chemical companies may need to rethink their cost structures, optimize their footprints and assets, and accelerate AI adoption to boost performance.
Image description:
A dual-line index chart compares the weighted mean TSR of the chemical sector versus the MSCI World Index from December 2002 through 2025, with both indexes normalized to 100 at the starting point. The chart is segmented into 4 distinct eras: infrastructure-driven outperformance (2002–09), expansion by China and unconventional feedstock in North America (2009–19), the COVID-19 pandemic (2020–21), and capacity imbalance (2022–25). During the first 3 eras, the chemical sector (light blue line) outpaces the MSCI World Index (dark blue line), peaking at nearly 1,000 in 2021 compared with the MSCI World Index’s 700. However, during the most recent era, the gap narrows as the chemical sector’s TSR growth slows significantly, with the lines converging closer by 2025. Bar charts below the main graph quantify the CAGR for each era: the chemical sector’s TSR CAGR outpaces the MSCI World Index in the first 3 eras—8% versus 5% (era 1), 13% versus 12% (era 2), and 24% versus 19% (era 3). But in era 4, the chemical sector falls to –7% while the MSCI World Index declines to 9%.
Note: This image description was completed with the assistance of Writer, a gen AI tool.
Source: S&P Capital IQ, S&P Global Market Intelligence, accessed Nov 2025; McKinsey analysis.
End of image description.
To read the article, see “Chemicals 2025: A new reality for the global chemical industry,” December 19, 2025.