Chemical suppliers have entered a profound transformation period
In order to succeed in the continuous challenges of the chemical industry, chemical suppliers should implement strategic initiatives in the areas of R & D and technology, including short-term and long-term focused efforts. This paper discusses five possible trends for companies in the chemical products industry to cope with disruptions in 2021.
The chemical industry market has entered a profound transformation period
The epidemic of covid-19 has had an unprecedented impact on the US economy and the chemical industry. The demand of the chemical industry has dropped sharply in the past eight months. Although the industry has faced cyclical challenges such as overcapacity, price pressure and trade uncertainty before 2020, many changes after the pandemic have shown structural or destructive characteristics. Chemical suppliers in the United States have responded to the crisis by focusing on operational efficiency, asset optimization and cost management.
As the industry enters 2021, changing economic, social, environmental and political expectations are expected to play a greater role in shaping its future. In order to succeed in the ever-changing chemical market, the company should consider implementing a series of targeted strategic initiatives in the main functional areas (such as R & D and Technology). However, focusing too much on the short term may mean that enterprises will eventually ignore long-term opportunities, including investment in innovation, emerging applications and adoption of new business models, resulting in sustained growth.
A key aspect of coping with this disruption in 2021 will be to understand which customer behaviors are temporary and which are permanent, as recovery may be uneven across different end markets and regions. Companies can solve this uncertainty by revisiting their product portfolio and making robust scenario planning with unknown factors. In this chemical industry outlook, we see five trends in the coming year.
1. Industry growth
Focus on new value streams and applications that drive industry recovery and future growth
Due to the diversity of end markets and more flexible sectors, the impact of the recession on the state of the chemical industry is likely to be moderate in 2021 compared with other industries such as automobiles. Therefore, in addition to cost optimization and capital constraints, industry participants may respond to changing demand by prioritizing growing end markets such as healthcare and electronics.
2. Impact of policy
Policy recommendations related to regulation, trade and sustainability can have a significant impact
The Biden administration has promised to reassess industrial tariffs because Biden's campaign believes that tariffs are a less effective tool of trade than alliances and other measures such as alliances. The Biden administration also advocated an end to the ongoing trade dispute with China. This could boost exports to the US chemical market and boost industry profitability through potential price recovery.
3. Global energy price
Fluctuations in raw material prices are unlikely to change the global export competitiveness of us chemical suppliers
According to a recent Deloitte post election survey, 58% of chemical supplier executives believe that the raw material cost advantage of the US chemical industry in terms of export competitiveness will last for at least the next three years. However, due to the imbalance between supply and demand or the continuous sharp drop of oil price, the unexpected and continuous soaring of natural gas price may temporarily destroy this advantage.
4. Accelerate sustainable development and decarbonization
Under the background of people's increasing concern for plastic waste, new opportunities have emerged
Consumers in the chemical market are likely to pay more and more attention to sustainability and give priority to products based on circularity and carbon footprint, which will drive chemical suppliers to accelerate their decarbonization technologies, re-examine their existing assets and start to shift from hydrocarbons to diversification where possible. In 2021, many U.S. chemical companies are expected to add mechanical recycling and renewable raw material based polymers to their products and invest in advanced recycling to introduce game changing green technologies on a commercial scale.
5. E-commerce
Chemical suppliers are increasingly using remote and digital sales channels
Unlike the recent mainly cyclical economic recession, chemical suppliers are now experiencing major changes in the way they operate and serve their customers. The company is adjusting how to work remotely, how to sell products, and how to interact with customers. Customers in the chemical industry want to simplify the ordering process, especially in a non-contact environment. Buyers expect better digital experiences and e-commerce solutions, such as real-time chat, which limits face-to-face interaction.
