Chemical plant surrounded by sunflowers, symbolizing industry growth.

Chemical Industry Blooms: How Innovation and Strategic Pricing Led to a Sunny 2017

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Mira Elwood in Business & Economy December 2025 • 4 min read.

"A deep dive into the first-quarter earnings that surpassed expectations, revealing the key factors behind the chemical industry's surprising success."


The chemical industry experienced a surprisingly strong start to 2017, with first-quarter earnings exceeding expectations across the board. This upswing wasn't just luck; it was the result of strategic pricing, robust demand for a wide array of products, and innovative approaches to market challenges. From seeds to electronic materials and even textile dyes, the chemical sector demonstrated remarkable resilience and growth.

Several companies reported earnings growth that defied initial forecasts, signaling a significant turnaround in market conditions. This positive momentum was driven by a combination of factors, including increased volumes and strategic price adjustments. Dow Chemical, for instance, reported substantial gains across its businesses, attributing its success to strong demand in key sectors such as packaging, transportation, infrastructure, consumer care, and electronic materials. Moreover, this demand wasn't limited to a single region; it spanned across China, the U.S., and Europe, highlighting the global nature of the industry's resurgence.

Andrew N. Liveris, then CEO of Dow, emphasized that the company's strong performance was directly linked to the overall health of the global economy. He proudly noted Dow's impressive streak of 14 consecutive quarters of year-over-year volume gains, underscoring the company's sustained growth trajectory. Liveris also expressed confidence that the highly anticipated merger between Dow and DuPont would be finalized by the end of August, further consolidating the industry landscape.

Decoding the First-Quarter Success: Key Drivers and Strategic Plays

Chemical plant surrounded by sunflowers, symbolizing industry growth.

A closer look at the first-quarter results reveals several key factors that contributed to the industry's stellar performance. One significant aspect was the ability of companies to capitalize on industrial demand. BASF, for example, leveraged this demand to implement an average price increase of 8% on basic chemicals during the quarter. Similar to Dow, BASF experienced broad-based volume growth across its basic chemicals, performance products, and functional materials divisions.

DuPont's success story was particularly noteworthy, driven primarily by demand from outside the U.S. The company saw strong sales for corn hybrids in Brazil and sunflower varieties in Europe. Beyond seeds, DuPont also benefited from its specialty polymers business, which caters to the automotive and electronics manufacturing sectors. This diversification proved crucial in navigating market fluctuations and maximizing revenue streams.

  • Strategic Pricing Adjustments: Companies like BASF successfully implemented price increases to capitalize on strong industrial demand.
  • Geographic Diversification: DuPont's success was significantly boosted by demand from outside the U.S., particularly in Brazil and Europe.
  • Product Innovation: DuPont's CEO, Edward D. Breen, credited new product innovations for boosting earnings.
  • End-Market Focus: Ashland benefited from consumer demand for personal care products and pharmaceuticals, allowing the firm to raise prices.
In a conference call with analysts, DuPont CEO Edward D. Breen highlighted the importance of new product innovations in driving the company's earnings, which increased by 8% to more than $1.1 billion compared to the previous year. Ashland also experienced a positive start to the year, with consumer demand for personal care products and pharmaceuticals containing specialty ingredients playing a crucial role. This demand enabled the company to raise prices and offset higher raw material costs. Stronger sales in industrial products, such as composites, intermediates, and solvents, further contributed to Ashland's success. By the end of the quarter, Ashland's earnings had increased by 5% to $121 million.

Looking Ahead: Sustaining Growth in a Dynamic Market

The chemical industry's strong first-quarter performance in 2017 was a testament to the power of strategic decision-making, innovation, and adaptability. As companies continue to navigate evolving market dynamics, maintaining a focus on customer needs, embracing sustainable practices, and investing in research and development will be critical for long-term success. The industry's ability to capitalize on opportunities while mitigating risks will determine whether it can sustain its growth trajectory in the years to come.

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Everything You Need To Know

1

What does strategic pricing mean, and why is it important for a company's success?

Strategic pricing refers to the adjustments companies make to the prices of their products based on factors like supply, demand, and competitive pressures. It's important because, as seen with BASF's 8% average price increase on basic chemicals, it allows companies to capitalize on strong industrial demand and increase profitability. The implications of strategic pricing are that companies can optimize their revenue streams, but they must also be mindful of how these adjustments impact their competitiveness and customer relationships.

2

Why is geographic diversification important for a company and what does it entail?

Geographic diversification involves expanding a company's operations and sales into different regions and countries. It's significant because, as demonstrated by DuPont's success with corn hybrids in Brazil and sunflower varieties in Europe, it allows companies to tap into new markets and reduce their reliance on any single region. The implications of geographic diversification are that companies can mitigate risks associated with regional economic downturns or market fluctuations, but they must also navigate the complexities of operating in diverse cultural and regulatory environments.

3

Can you explain what product innovation is and how it drives a company's earnings?

Product innovation refers to the development and introduction of new or improved products that meet evolving customer needs and market demands. It's crucial because, as highlighted by DuPont CEO Edward D. Breen, it drives earnings growth and enhances a company's competitive edge. The implications of product innovation are that companies can capture new market share, command premium pricing, and build brand loyalty, but they must also invest in research and development and manage the risks associated with bringing new products to market.

4

What does it mean when a company focuses on the end-market, and how does that help it do better?

End-market focus involves tailoring a company's products and services to meet the specific needs and preferences of particular customer segments or industries. It's important because, as illustrated by Ashland's success with personal care products and pharmaceuticals, it allows companies to command higher prices and offset rising raw material costs. The implications of end-market focus are that companies can build strong customer relationships, differentiate themselves from competitors, and create niche markets, but they must also have a deep understanding of their target markets and adapt to changing customer demands.

5

What does the merger between Dow and DuPont tell us about the chemical industry?

The merger between Dow and DuPont, mentioned by Dow's CEO Andrew N. Liveris, is an example of industry consolidation. This is when multiple smaller companies are brought together under one larger business umbrella. These mergers can lead to greater efficiency, more negotiating power, and opportunities for innovation, but they must be mindful of regulatory hurdles and potential impacts on competition.

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