The chemical industry has grappled with a demand slowdown in certain major markets, including consumer durables and building & construction, cautious spending by customers and pockets of inventory de-stocking, which have weighed on the industry throughout this year. Lower consumer spending due to inflationary pressures in Europe and a slow recovery in China have impacted demand, further exacerbated by disruptions from trade tariffs. Challenges from elevated input, supply chain and logistics costs also remained unabated.

Amid the challenges, certain companies in this space have managed to stand out with impressive performances. These include Perimeter Solutions, Inc. (PRM Quick QuotePRM - Free Report) , Albemarle Corporation (ALB Quick QuoteALB - Free Report) and Sociedad Quimica y Minera de Chile S.A. (SQM Quick QuoteSQM - Free Report) .

A Tough Year for Chemicals

The year 2025 brought several challenges to the chemical industry. The downturn in the building & construction and consumer electronics markets played spoilsport, leading to demand destruction in these key markets. In North America, uncertainties surrounding the U.S. housing market have weighed on building & construction. Elevated borrowing costs and inflation have taken a bite out of the residential construction industry. The consumer electronics market, a key driver of demand for specialty chemicals and advanced materials, is among the hardest hit. Following the post-pandemic boom, global electronics demand has cooled amid high inflation, elevated interest rates and cautious consumer behavior. 

The automotive industry, traditionally a significant consumer of chemicals like plastics, adhesives, and coatings, has experienced a mixed year. While the shift toward electric vehicles has created pockets of demand, overall vehicle production was constrained by high input costs and economic uncertainties. High interest rates, along with concerns over economic slowdown and tariffs, put pressure on the automotive market in 2025. In packaging, inflationary pressures constrained discretionary consumer spending, impacting the sector. 

Manufacturing activities have also softened amid weaker demand for goods and higher borrowing costs, while recovery remains tepid. Demand for chemicals in the industrial sector has also weakened due to constrained industrial production. The imposition of hefty tariffs has also introduced significant headwinds for the chemical industry. The soft demand conditions, along with the weak macroeconomic environment and tariff-induced impacts, have hurt chemical volumes in 2025. 

A slower recovery in economic activities in China, a major consumer of chemicals, has hurt demand in that country. China has grappled with the United States on trade, slow growth in industrial output and sluggish consumer spending. The slowdown in the real estate sector further suppressed demand for construction chemicals. Geopolitical tensions, low consumer confidence and high inflation have also dampened demand in Europe. Energy and feedstock inflation has resulted in sluggish industrial activities and consumer spending in Europe.  

Chemical makers also remain exposed to headwinds from raw material and energy cost inflation, and supply-chain and freight transportation disruptions. Tariffs have also led to increased costs for raw materials, resulting in higher production expenses for the industry players. 

Against the challenging backdrop, chemical companies continue to take a host of strategic measures, including cost-cutting and productivity improvement, operational efficiency improvement and actions to strengthen the balance sheet and boost cash flows. In particular, the industry participants are aggressively implementing actions to bring down costs. They are also raising selling prices to counter inflation. Such moves are likely to help the industry sustain margins heading into 2026.

3 Chemical Stocks Worth a Look

While the chemical industry endured a challenging year amid subdued demand across certain key markets and trade-induced headwinds compounded by macroeconomic conditions in China and Europe, a few companies demonstrated remarkable resilience and delivered notable returns on the bourses. We have handpicked three chemical stocks that have gained more than 100% in the past six months.

Six-month Stock Price Performance of PRM, ALB & SQM

Image Source: Zacks Investment Research

Perimeter Solutions: Missouri-based Perimeter Solutions is expected to benefit from the efforts to drive profitable new business and productivity measures. Favorable industry trends are expected to continue to drive demand for fire-retardant products. The company remains focused on expanding its fire prevention and protection business. Its Specialty Products segment is being supported by the IMS acquisition and purchases by high-quality specialty chemicals customers. PRM’s strong balance sheet also offers adequate liquidity for growth investments and M&A opportunities. The recently announced acquisition of Medical Manufacturing Technologies complements Perimeter’s focus on businesses in growth markets with strong free cash flow and sustainable earnings power. 

Perimeter Solutions has expected earnings growth of 7.4% for 2026. The Zacks Consensus Estimate for 2026 earnings has been revised 17.7% upward over the past 60 days. PRM’s shares have shot up 114.7% in the past six months. Perimeter Solutions currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Albemarle: North Carolina-based Albemarle is well-placed to gain from long-term growth in the battery-grade lithium market. The market for lithium batteries and energy storage remains strong, especially for electric vehicles (EVs), offering significant opportunities for the company to develop innovative products and expand capacity. Lithium demand is expected to grow with significant global EV penetration. ALB is strategically executing its projects aimed at boosting its global lithium conversion capacity. It remains focused on investing in high-return projects to drive productivity. Albemarle is also taking actions to cut costs, optimize its conversion network and increase efficiencies to preserve its long-term competitive position. 

Albemarle has expected earnings growth of 177.9% for 2026. The company beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters. In this timeframe, it delivered an earnings surprise of 35.3%, on average. Shares of ALB have rallied 124.4% in the past six months. Albemarle is a Zacks Rank #3 (Hold) stock. 

Sociedad Quimica: Chile-based Sociedad Quimica is benefiting from being the low-cost producer of potassium chloride, potassium sulfate and potassium nitrate. SQM is gaining from favorable trends in the lithium market underpinned by strong EV sales. Higher demand is also expected to continue to support the company’s lithium sales volumes. Strong demand from EVs and energy storage systems, along with supply disruptions, is also driving an improvement in lithium prices. Iodine volumes are also being boosted by growing demand following the post-pandemic recovery. SQM is also expected to benefit from its investment in expanding production capacity. Its Specialty Plant Nutrition business is also seeing higher demand across key end markets. 

Sociedad Quimica, carrying a Zacks Rank #3, has an expected earnings growth of 71.9% for 2026. The consensus estimate for 2026 earnings has been revised 9.5% upward over the past 60 days. SQM’s shares have surged 101.9% in the past six months.