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Global oversupply, uncertain demand, and tough cost structures are reshaping the chemical industry, leaving many companies facing unprecedented challenges. John Stekla, Director at Parin Resources, joins host Victoria Meyer for a frank conversation about the realities facing chemical producers, traders, and buyers as the industry moves into 2026. They examine the drivers of margin compression, how U.S. and global players are making difficult operational choices, and why even the industry’s cost advantages aren’t a guaranteed ticket to success.
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- Global chemicals face excess supply, flat demand, and rising competition.
- Companies are focusing on efficiency and cost-cutting to survive shrinking margins.
- The industry is restructuring with asset shutdowns and tough make-or-buy decisions.
- U.S. cost advantage persists, but fuels new competition as exports rise.
- Lessons from past cycles highlight the need for readiness and adaptability.
Killer Quote: “The bright and shiny thing really is … the cost position that can’t be reproduced anywhere in the world … That puts us in a great position to take advantage of the demand when it bounces back. And it will, without a doubt. We’re always in cycles and you could argue it’s an eight or ten year cycle, but we’ve been through this before and we’re in a very strong position to weather it.” — John Stekla
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Is Recovery on the Horizon? Hard Realities Facing Petrochemicals in 2026 with John Stekla of Perin Resources
The chemical industry has always operated at the intersection of innovation, global economics, and supply-demand dynamics. On a recent episode of The Chemical Show, host Victoria Meyer sat down with John Stekla, Director at Perin Resources, to explore the realities shaping the chemical sector as 2025 closes and 2026 approaches. Their conversation covered everything from cost advantages and global demand issues to operational strategies and the cyclical nature of business. Here are the key takeaways and a closer look at what industry professionals can expect next year.
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A Unique Market Position Facing Tough Realities
Both Victoria and John pointed out that the U.S. chemical industry retains a significant cost edge over much of the world, especially outside the Middle East and Western Canada. However, despite this advantage, domestic plants are underutilized, exports of key derivatives like ethylene and propylene are down, and crackers are running well below optimal rates.
What’s driving this? According to John, it’s less about cost and more about weak global demand. Newly ramped-up production in markets like China is pushing U.S. suppliers out, while regions like Europe and Korea are facing their own structural cost pressures due to energy inputs. These conditions have set the stage for what may be an extended period of oversupply and depressed margins.
Supply vs. Demand: A Persistent Dilemma
As Victoria highlighted, the industry sits on an overbuilt base—especially in commodities like ethylene and related products—while demand remains flat or even in decline depending on geography. This imbalance is expected to last well beyond 2025, with some experts not anticipating market rebalance until 2029 or 2030.
For companies operating in this environment, the pressure is on to continually reassess both supply commitments and demand forecasts. Overbuilding—once propelled by favorable cost positions and expectations of population and market growth in Asia—now complicates day-to-day operations and future planning.
Operational Strategies: Efficiency and Adaptation
With market fundamentals shifting, John described how companies are taking proactive steps to optimize costs and resources. One approach: combining purchasing power across multiple plants to secure better deals on high-volume, low-value products like sulfuric acid. Others are reevaluating logistics, sometimes outsourcing the management of material transport to focus internal resources on customers and products that truly move the business forward.
These efficiency drives increasingly go hand-in-hand with tough choices, such as whether to idle older, less efficient assets until market conditions improve. The make-versus-buy discussions are becoming more common, with producers weighing whether it makes more financial sense to purchase feedstocks rather than produce them in-house.
Structural Change and the Next Chapter
Market downturns tend to spur structural shifts. Recent announcements—from Dow idling assets in North America to ExxonMobil closing older crackers in Singapore—signal the kind of action that’s likely to continue into 2026. As John noted, there’s a global recalibration underway. The old playbooks, written for times of steady demand and strong growth, may not fit today’s realities. New strategies focused on resiliency and agility are essential.
Looking Forward: Resilience Amid Cycles
A recurring theme from the conversation was the cyclical nature of the chemical industry. While today’s challenges may feel daunting—prolonged weak demand, excess capacity, and shifting global demographics—the U.S. retains a unique advantage thanks to its shale-driven feedstock position. As John emphasized, this cost edge remains the envy of the world and forms a foundation for future recovery.
The key for chemical businesses in 2026? Drive efficiency, focus on core strengths, and prepare for several years of margin pressure before an eventual rebound. The market will inevitably cycle back, and those who weather the storm now will be best positioned to thrive again.
Conclusion
Adaptation and preparedness are the watchwords for the chemical industry as it heads into another challenging year. Insights from industry veterans like John Stekla highlight both the hurdles and the opportunities ahead. With a focus on operational efficiency, structural flexibility, and recognition of global market forces, industry leaders can steer their teams through turbulence and toward long-term growth—ready for the next upswing when it arrives.
About John Stekla:
John Stekla is an accomplished senior sales and marketing executive with broad international and domestic experience in petrochemicals, lubricant and fuel additives, and performance chemicals. John is an experienced petrochemical consultant with broad knowledge of olefins, aromatics, petrochemical derivatives, natural gas liquids, and feedstocks. John led the commercial effort to develop a joint venture world scale cracker project on the US Gulf Coast and the effort to expand ethylene pipeline connectivity in the U.S. Gulf Coast area. John has extensive experience as Sales Manager and senior level Account Manager with exceptional interpersonal skills. John is skilled at developing strong customer relationships, building effective teams, and managing people and is an experienced leader/member of numerous teams designed to produce customer satisfaction, efficient operations, and business success.