Updated on 25 September 2025
The cost of doing business: Analyzing risk and insolvency trends in the APAC chemicals supply chain
For the highly cyclical chemicals sector, managing credit risk is paramount. While the APAC region drives much of the global output, the overall sector rating globally and in APAC remains at Medium Risk. This suggests that despite growth, underlying financial vulnerabilities persist, amplified by oversupply, geopolitical conflicts, and rising insolvencies. This data deep dive examines the key financial and market risks that chemicals companies must monitor in 2025, with a focus on regional financial health.
Summary
Key takeaways
- Global Risk: The global and APAC chemicals sectors are rated Medium Risk for 2025.
- Insolvency Wave: Taiwan (+8%) and New Zealand (+5%) are expected to see the highest growth in business insolvencies in 2025.
- Investment Shift: Asia (led by China) is the undisputed leader in CAPEX, responsible for 70% of total capital spending globally.
Geopolitical and price volatility exposure
The chemicals sector is highly exposed to external shocks, particularly geopolitical risks like the Ukraine and Israel conflicts, which continue to disrupt energy prices and shipping routes. This has contributed to a dramatic redistribution of powers, with Europe losing industrial competitiveness due to high energy costs (European natural gas prices were 3.9x higher than the US last year). While Asian and US companies benefit from competitive cost advantages , the segment is still struggling with low pricing power, especially for bulk chemicals like petrochemicals, due to oversupply.
China's role in the oversupply crisis
China is the world's leading consumer and producer. Its market share has significantly expanded in the last decade (from 34% to 43% of global sales). However, this rapid growth, particularly in production, has been exceeding demand levels, creating an oversupply that is putting downward pressure on prices across the region. This excess capacity is a key reason why major firms in South Korea and Japan are struggling and pivoting their strategies towards higher-value specialty chemicals.
Business insolvency outlook for 2025
The APAC region is set to see a +5% year-on-year increase in business insolvencies in 2025. While some countries that hit highs in 2024 are expected to reverse the trend (e.g., Australia at -2%, Singapore at -4%), others are seeing significant upticks due to weak external demand and the lagging effects of high interest rates.
Taiwan (+8%) and New Zealand (+5%) are among those expected to see the largest growth in insolvencies. Companies must therefore carefully monitor the financial health of their suppliers and clients, as the structural shifts and trade wars could set a new record for large insolvencies, raising the risk of a domino effect.
Conclusion
The data shows that 2025 will be a year defined by high investment (Asia accounts for 70% of global CAPEX) and elevated risk. For chemicals players, successfully navigating the year requires not just focusing on growth markets like India and specialty chemicals, but also implementing robust risk management strategies to safeguard cash flow against the rising tide of insolvencies across the region.
You might also be interested in...
Our expertise and commitment
Allianz Trade is the global leader in trade credit insurance and credit management, offering tailored solutions to mitigate the risks associated withbad debt, thereby ensuring the financial stability of businesses. Our products and services help companies with risk management, cash flow management, accounts receivables protection, Surety bonds, business fraud Insurance, debt collection processes and e-commerce credit insurance ensuring the financial resilience for our client’s businesses. Our expertise in risk mitigation and finance positions us as trusted advisors, enabling businesses aspiring for global success to expand into international markets with confidence.
Our business is built on supporting relationships between people and organizations, relationships that extend across frontiers of all kinds - geographical, financial, industrial, and more. We are constantly aware that our work has an impact on the communities we serve and that we have a duty to help and support others. At Allianz Trade, we are strongly committed to fairness for all without discrimination, among our own people and in our many relationships with those outside our business.