UK Chemical Industry Outlook – Trends & Challenges for 2024

In our last industry outlook covering the UK chemical sector, we reported on consolidation in 2022-2023 and greater future growth. As the picture for 2024 emerges, it is clear that there is significant growth and innovation in the UK chemical sector. However, as the UK commits to decarbonisation and new technologies, the impact on capex programmes is significant – with chemical organisations moving further away from heavy, polluting processes and facilitate the UK’s energy transition and decarbonisation.

Chemical Sector Trends for 2024

Decarbonisation and the energy transition are fuelling a massive adjustment in where capex projects are targeted in the UK chemical sector.

The boom in battery manufacturing and the associated supply chain has really defined the type of chemical capex we are tracking. There are numerous projects from upstream processing of raw materials, through midstream processing of materials into cathodes to downstream processing of battery cells and packs.

The economy of the future will be extremely dependent on these batteries, and we are also seeing primary and secondary battery processing projects to recycle and ‘close the loop’ on what is a resource intensive manufacturing process.

Biofuel from renewable sources is also booming, sustainable aviation fuel is one area in which capex is emerging rapidly to derive fuels from industry waste.

Nuclear modular reactors are an area of growth, as the sector tries to solve the challenge of energy demand smoothing from renewables. These reactors will need fuel to operate and we are actively tracking chemical sector capex to provide this.

Petrochemical sites are being targeted for retrofitting of carbon capture and/or hydrogen plants to reduce their carbon footprint.

Ammonia storage and cracking facilities for hydrogen production are also a growth area.

Challenges for the UK Chemical Industry

Engineering resource is stretched. As the demands of battery production crystallise, supply chain issues are proving challenging. Governments are looking to reshore raw material production though inflation and pricing issues are proving difficult for industry players.

Many larger organisations are keeping contracts internal and are also focusing on retrofitting or upgrading existing plant rather than committing to large new build expenditure.

Some are diversifying into battery cleanrooms away from cleanroom pharmaceutical production, as that sector undergoes a post-Covid adjustment.

Merger and acquisition activity actually dropped globally in 2023, though higher activity is expected this year. Examples include the acquisition of BritishVolt by Recharge, or Spie being acquired by Imtech/Dalkia.

Future Outlook for UK Chemical Industry

The current UK government has leaned away slightly from the net zero targets and backed new oil exploration in the North Sea to boost energy security. There are major mothballing projects coming up, such as Grangemouth Refinery, which is due to close by 2025 – with a potential bio-refinery conversion project recently rejected the future remains uncertain.

R&D spending will likely continue to increase, as the sector commits to the decarbonisation and green agenda, with continued innovation in closed loop processing moving the industry forward and driving capex.

Conclusion

Overall, suppliers of capital equipment and machinery to the UK chemical sectors should feel positive. 2024 represents the ‘new normal’ for the chemical sector – where innovative green technologies, supported by strong R&D and government backing – means that the outlook is positive for capex projects.

In the fast-moving area of battery production, suppliers must begin to construct new relationships with key stakeholders, and ensure their product offerings are aligned with the goals of potential clients. Where capex is approved, it moves quickly – making timeliness of approach a critical concern.

At Protel, we can help your commercial team to have the right information that they need to make a start on these relationships, or to ensure they are kept up to date on where capex is happening among their existing network.

Our UK Chemical Industry Capex Coverage

We can help your commercial teams to have the right information they need to make a start on these relationships, or to ensure they are kept up to date on where capex is happening.

At Protel we are currently tracking just over 200 active capex projects in the chemical sector in the UK. The total combined potential investment value is just over £21bn.

Full details are available to subscribers, with full support and training provided by our team of expert account managers. Take a look at the type of information available here or contact us to book in a demonstration of our system.

Do you want to capitalise on the emerging UK chemical industry trends in 2024? Contact us to find out how we can help you.