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Demand-Supply & Capacity Gap Analysis

Will new capacity be absorbed, or is the market heading for oversupply?

Many plants are built into markets that look short today and turn long by start-up. A capacity gap analysis sets projected demand against installed, under-construction and announced capacity, plant by plant, so the timing and size of a new project can be tested against the supply that will arrive alongside it.

Discuss your capacity questionSee the deliverables

When a capacity gap analysis matters

It is most useful in capital-intensive markets where several producers are announcing projects at once.

Timing a new plant

Find the window when demand outruns supply, and when it closes.

Sizing a debottleneck or expansion

Judge how much extra output the market can take without pressure on prices.

Reviewing a competitor's announcement

Assess whether a rival's project changes the balance in your region.

Investment screening

Spot markets heading into oversupply before committing equity.

Reading a supply-demand balance

Demand is set against capacity that is operating, funded and only announced, so the window for a new plant is visible by year.

Scroll sideways to see the whole figure.

Window for new capacityonly if announced projects slipYear 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Volume (index)DemandOperating and funded capacityWith announced projects
Illustrative. In this example the window opens in year 6 only if announced projects slip. Shapes only, not client or market data.

Questions a capacity gap analysis answers

Supply

  • What capacity is installed, by plant, owner and location?
  • Which projects are under construction, and which are only announced?
  • What utilization do plants run at?

Demand

  • How will demand grow by region and end use?
  • How much is met by imports today?

Balance

  • In which years is the market short or long?
  • How sensitive is the balance to delays or cancellations?
  • Where is there room for a new entrant?

What public data can show, and what needs research

Capacity announcements are public; whether they get built, and when, is not.

Where desk research is usually enough and where primary research is needed
TopicPublic data showsStill uncertainHow it is tested
Installed capacityNameplate capacity by plantEffective capacity and utilizationExpert and producer interviews
Project pipelineAnnounced projects and datesWhich projects are funded and on schedulePermit, contractor and financing checks
DemandHistorical consumption and tradeDemand by end use over the forecast periodEnd-use modeling and buyer interviews
TradeImport and export volumesHow trade shifts when local capacity startsLanded cost comparison

Each project in the pipeline is graded by evidence: operating, under construction, funded, or announced only.

Illustrative example

This example is illustrative. It shows how a study could be designed and does not describe a client project.

A specialty chemical in Southeast Asia

Illustrative example
Business question
A producer is weighing a new specialty chemical unit in Southeast Asia while two rivals have announced projects in the region.
Evidence gap
Announcements are public, but their funding, construction status and start dates are unclear.
Research method
A plant-by-plant capacity database, project status checks, end-use demand modeling and interviews with traders and buyers.
Output
A supply-demand balance by year with low, base and high cases, and the window in which a new plant would run at viable rates.

What this study does not include

Clear limits keep the findings honest and the scope easy to price.

  • Plant utilization data from non-public or confidential sources
  • Price forecasting guarantees
  • Engineering assessment of competitor plants

Where a decision needs engineering or legal sign-off, the study says so and lists the questions for that review.

What you receive

Outputs are agreed at scoping; this is a typical set.

  • Capacity database

    Installed and planned capacity by plant, owner, location and status.

    Use it to see exactly who supplies the market.

  • Demand forecast

    Demand by region and end use over the study period.

    Use it to anchor the balance in end-use drivers.

  • Supply-demand balance

    Surplus or deficit by year, with scenarios for project delays.

    Use it to time the investment.

  • Oversupply risk assessment

    Which projects would tip the market, and how likely they are.

    Use it to set the downside case.

How a feasibility study works

  1. 1

    ScopingThe decision, product, capacity, locations and level of study are agreed, along with what is in and out of scope.

  2. 2

    Primary and secondary researchAnalysts combine company filings, trade and tariff data, capacity announcements and price series with interviews of producers, buyers, suppliers and industry experts.

  3. 3

    ValidationKey figures are cross-checked against at least two independent sources, and every assumption is logged with its source and date.

  4. 4

    ModelingDemand, cost and financial models are built in Excel with base, upside and downside cases, so each assumption can be changed and traced.

  5. 5

    Analyst review and decision memoA senior analyst reviews the findings, and the study closes with a memo on whether the case holds, the riskiest assumptions and the next steps.

Frequently asked questions

Request a feasibility study proposal

Describe the product, location and capacity you are considering, and the decision the study must support. A short brief is enough to start.

What happens next

An analyst reviews the brief and replies within one business day with scoping questions. A proposal follows with the study scope, deliverables and timeline.

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