Water treatment chemicals: Cycles

How energy shocks briefly made water chemicals boom

Prices of commodity coagulants and polymers follow energy, acids and acrylonitrile with a lag of one or two quarters, because contracts are annual or quarterly. Service programmes reprice slowly but rarely fall. The result is a revenue cycle driven by pass-through and a margin that dips briefly when costs spike and widens when they fall. Kemira's revenue rose about a third in 2022 on price increases, then fell in 2024-2025 as prices came down, while its operative EBITDA margin held near 19-20%. The floor is set by municipal demand, which barely moves; the ceiling by competition from local coagulant makers and Chinese polymers.

Kemira's operative EBITDA margin (19.1% in 2025; Water Solutions 18.5% in Q4 2025) is the best public gauge. For polyacrylamide, the gap between polymer price and 0.75 x acrylonitrile price is the margin proxy, but polymer prices are not public.

Booms and busts

1. 2022

   Energy and raw material inflation after Russia's invasion of Ukraine. Producers pushed through large price increases; volumes held because water treatment cannot stop.

   Kemira segment revenue rose from EUR 2.68 billion (2021) to EUR 3.57 billion (2022), about +33%; Industry & Water margin fell to 14.5% from 16.2% (Kemira AGM 2025, segment charts)

2. 2023

   Raw material and energy costs fell faster than selling prices, so margins widened to records.

   Kemira Industry & Water operative EBITDA margin 20.5% (23.2% excluding oil and gas); group 19.7% on EUR 3.38 billion revenue (Kemira AGM 2025)

3. 2024-2025

   Selling prices drifted down from the elevated base and industrial volumes weakened, especially paper and industrial water.

   Kemira revenue EUR 2.95 billion (2024) and EUR 2.75 billion (2025); operative EBITDA margin 19.9% then 19.1% (Kemira)

4. 2026

   The Hormuz disruption from late February 2026 raised oil, naphtha and propylene-chain costs, a test of pass-through for polymers and inhibitors. Kemira guided EUR 2.6-3.0 billion revenue assuming stable raw materials.

   Brent averaged $120.4/bbl in April 2026 against $71.1 in February (World Bank via crude oil tile); Kemira 2026 outlook

What drives the cycle

• Acid, alumina and acrylonitrile costs. These set coagulant and polymer costs and are passed through with a lag of a quarter or two.
• Regulation. Phosphorus discharge limits, PFAS rules and zero liquid discharge mandates create step changes in demand for specific chemicals.
• Industrial activity. Paper, mining, oil and chemicals are 45.8% of demand; their volumes fell in 2024-2025.
• Chinese export supply. China exports polyacrylamide, phosphonates and PAC, capping prices in Asia and India.

Metrics to track