After 10 years or more of economic growth, the global chemical industry is preparing for a possible global economic downturn. Concerns about the economic slowdown in the United States, the security of future energy supply, and the increasing regulatory burden in many regions have exacerbated the general impression that difficult times may still be ahead.
In the past, this difficult period has often proved to be an opportunity for chemical manufacturer to take advantage of their advantages and maintain profitability through innovation. Although these opportunities have been fully elaborated in C I and other publications, the potential threats have not been fully explored. Some of them seem obvious. For example, the impact of the current turmoil in global financial markets remains to be seen. Due to climate change, more and more regulations will be imposed on the industry. Of course, in the foreseeable future, the oil industry will have to endure high oil prices.
However, many other threats are unknown, and their impact will vary from location to location. For example, the Chinese government's activities to obtain raw materials from all over the world may benefit Asia, but this should be a worrying prospect for chemical manufacturers in the European Union.
In the list below, we will present our views on some of the most pressing threats facing the industry based on past experience. As a starting point for further discussion, we believe that they should provide useful guidance for some of the potential risks that may arise in the next decade.
1. Global economy
The profitability of the chemical industry has been a hostage to the fate of the global economy because it depends on the demand for its products and the cost of its raw materials, oil and gas. From the end of the Second World War to the first oil crisis in 1973, the golden age of European and American chemical industry is unlikely to repeat anywhere. Since the 1980s, in the past 30 years, the global economic recession occurred in the first few years of each year, coupled with the great recession in Asia in 1999, which severely hit the demand for chemicals.
2. Political events
The impact of the Iraq conflict may not have a significant lasting impact on the chemical industry in the Middle East or around the world. However, any major conflict involving the whole Middle East will have inestimable consequences for the chemical industry, undermining trade stability, downstream industries, and even the governments of oil producing countries.
3. Government intervention
In the 1980s, the government intervened in several European countries, mainly in the state-owned chemical sector, resulting in a persistent problem that is now being left behind. The dangerous "chemical faction" of the country has obviously proved that in the case of France, the chemical industries of Italy and Spain, in the 1980s, the cosmetics companies that their respective governments constantly obstructed, were always against them. In the case of Italy, they almost completely killed their chemical industries. While such things are unlikely to happen in Europe, they are inevitable in the developing regions of the world, where national oil / Petrochemicals retain a large stake, and any foreign company cooperating with national producers will be involved in those ensuing changes, with little or no say in restructuring.
4. Activities of the parent company
Changes in petrochemical landscape can hardly be recognized. In the 1990s, it was mainly due to the impact of mergers and acquisitions of China's oil giants Exxon and Mobil, BP and other small chemicals businesses, such as fina and spirit, which inevitably had a significant impact, good or bad. In the future, such mergers may continue to affect chemical manufacturers in developed countries, and as oil producers merge to achieve global scale, mergers in developing regions will certainly become common in the future.
5 energy and raw materials
For decades, the cost of electricity in the chemical industry has been the focus of debate, and when the oil price is high, the cost of raw materials may put the chemical industry in Europe at a huge disadvantage. At present, there is no feasible substitute for fossil resources of petrochemical products, and petrochemical products are the foundation of the whole chemical industry, from drugs to fertilizers, from dyes to paints, from synthetic textiles to plastic products. The main threat is that the availability of petrochemical feedstocks from natural gas and refinery streams will also decline if the demand for fuels declines, although this problem can be solved by developing ways to convert streams other than naphtha and diesel into chemical feedstocks.
