The chemical industry promises another year of cutbacks

Major chemical manufacturers are entering 2026 with plans for significant cost-cutting and restructuring following a year of sharp financial declines. In 2025, the sector grappled with overcapacity, volatile markets, and sluggish demand, leading to plummeting earnings for industry leaders like BASF, Dow, and Eastman Chemical. Executives are now prioritizing internal efficiencies and portfolio management to mitigate the impact of a hostile global economic environment.

BASF, the world’s largest chemical producer, reported a 38.8% drop in earnings for 2025, with sales falling 2.9% despite increased volumes in most business units. CEO Markus Kamieth attributed the performance to a volatile global market and emphasized the company's "Winning Ways" strategy to manage controllable factors. The firm has already achieved $2 billion in annual cost reductions since 2023 and aims to reach $2.7 billion by the end of 2026. These efforts include reducing senior executive staff by 11% and cutting 4,800 jobs, while simultaneously divesting a majority stake in its coatings business to Carlyle and the Qatar Investment Authority.

Dow has also intensified its restructuring efforts after reporting a $657 million loss last month. While the company initially targeted $1 billion in savings and 1,500 job cuts a year ago, the deepening market downturn has forced a more aggressive approach. Dow now plans to eliminate an additional 4,500 positions as part of a broader $2 billion streamlining program. This move reflects a broader industry trend where initial efficiency measures proved insufficient against the backdrop of persistent economic headwinds and pricing pressures.

Eastman Chemical followed a similar trajectory, with 2025 earnings sinking 32.7% to $627 million on a 6.5% decline in sales. CEO Mark Costa noted that while the company successfully cut $100 million in costs during 2025, it must find an additional $125 million to $150 million in savings throughout 2026. Across the sector, these aggressive maneuvers in portfolio management and head count reduction are being framed as essential steps to maintain stability as the industry navigates a period of significant uncertainty and overcapacity.