In the early 2000s, Mexico's chemical sector supplied much of the country's local manufacturing. Over the past two decades, however, Mexico has lagged behind the booming global chemical industry. Mexico is increasingly dependent on imports, and the domestic sector faces structural challenges such as raw material shortages, high energy costs, and limited innovation.

Mexico's chemical industry is undergoing a profound transformation, including a shift to sustainable products, chemical chain integration, and a new value pool that could revitalize Mexico's chemical industry. Given its large market, location, strong recycling chain, and renewable resources, Mexico is well-positioned to seize these industrial shifts.

In this article, we begin by reviewing the challenges facing the Mexican chemical industry, its strengths, and the global trends that may influence its direction. We then offer four possible paths: stay the course, focus on specialty chemical and value-added solutions, revitalize the industry base, and re-imagine the industry. In these pathways, growth will depend on infrastructure development, methods of sourcing raw materials, and the ability to innovate and invest on a large scale.

Mexico has the potential to double its chemical production output by 2035, adding 4% to total GDP growth over the next decade, benefiting manufacturing as a whole, and easing prices for consumers through lower-cost supplies. Shorter supply chains may also lead to higher service levels and lower carbon emissions. Seizing this opportunity requires long-term investments that can also lead to sustainable and inclusive growth.