29 December 2009 13:55 [Source: ICB]
The global chemical industry is going through some of the most turbulent times in its history. With 2009 behind us, we asked some key figures to make predictions for 2010. What will happen to this nascent recovery, and will real demand return after the stimulus packages end? Can we rely on Asia to continue its powerful recovery? Will merger and acquisition activity pick up? See what industry leaders and experts say on the following pages and let us know if you agree. Send your views to firstname.lastname@example.org
AXEL HEITMANN CHAIRMAN AND CEO LANXESS
"2010 will be a year of recovery for the chemical industry, although a return to the 'good old days' of the pre-crisis era will remain elusive. One shining light in 2009 was China, which I believe will continue to play a vital role in influencing the global economy in 2010. The growing affluence of its middle class, coupled with an increase in megatrends such as mobility and urbanization will fuel this influence. This will, of course, benefit the chemical industry and its products."
SEIFI GHASEMI CHAIRMAN AND CEO, ROCKWOOD HOLDINGS
"In 2010, we will witness the beginnings of a transportation revolution. In the US, therehas been a growing consciousness that our dependence on oil is a threat to national security, to the environment and to the economy, and now there are leaders who are ready to commit to the transition to electric vehicles. Next year, major manufacturers such as General Motors and Nissan will introduce plug-in electric vehicles. I predict that this technology will be rapidly accepted, such that by 2020, a full 20% of all cars manufactured will be all-electric or plug-in hybrid vehicles."
RANDY DEARTH PRESIDENT AND CEO LANXESS CORP.
"2010 will be a year of keeping the chemical industry competitive. This can happen in two ways - an uptick in mergers and acquisitions activity, both foreign and domestic, leading to stronger more capable companies. Secondly, our industry leaders will increase dialogue with policy makers at every level of government, ensuring a seat at the table when legislation is proposed that can have an impact on chemical companies."
BERNARDO GRADIN, CEO, BRASKEM
"The challenges for the petrochemical industry in coming years will be operational excellence with competitiveness in a surplus scenario, the cash flow management, and the development of concrete solutions to meet the principles of a sustainable low carbon economy. Companies able to overcome those challenges will be best positioned after the downturn."
JOHN VAN OSCH PRESIDENT EMEA UNIVAR EUROPE
"Creating real value for customers and suppliers will be the key to success in 2010. Geographical expansion into dynamic new markets and the extension of innovative product portfolios will be the foundation for distributors to successfully transform their businesses into sales and marketing organizations. These companies will lead the way in 2010 and beyond with their in-depth market knowledge, expertise in application development and first class service."
ANTONIO TRIUS, CEO, COGNIS
"The economic situation remains volatile. Against this background, it is important not to lose sight of what is most crucial to our business - our customers. To address their current and future needs, we need to be quick in developing innovative solutions that meet the specific requirements of markets and consumers."
ALAN WATKINS GLOBAL HEAD OF MERCHANT & PACKAGED GASES LINDE
"2010 will see a slow and uneven recovery of economies. Longer term, energy and environment will dominate thinking, and there will be greater transparency about carbon footprints, leading to 'smarter' supply chains. Joint ventures will be an increasing feature to manage capacity and globalization. The Middle East will be the leading geography in petrochemicals and the BRIC countries in steel - their companies will become global leaders."
FEIKE SIJBESMA, CEO, DSM
"There will be uncertainty but definitely also opportunities in 2010. While government debts increase, stimulus programs taper off and unemployment rises, the extent to which mature economy businesses and consumer expenditures pick up the slack is difficult to predict. Emerging markets will, however, continue to grow at healthy rates and especially post-Copenhagen, sustainability and bio-based production and products will become increasingly important."
PATRICK THOMAS, CEO, BAYER MATERIALSCIENCE
"2010 should see a more stable environment for a continued chemical industry recovery. The industry has handled the recent recession reasonably well and the aftermath may well see some further consolidation in certain areas, particularly in the commodity sectors. However, as recovery continues, we also expect to see pressure coming in the form of rising raw material and energy prices."
HELMUT STRUGER, CEO, BRENNTAG CENTRAL & EASTERN EUROPE
2010 will see an improvement in the performance of the well-organized and especially the global distributors. As long as distributors can prove how to add value for customers and suppliers, they will be successful. Greater regulations in 2010 in Europe with Reach and the new chemical law GHS provide good opportunities for distributors to save costs, reduce complexity and be a valuable partner in the supply chain.
CHRIS JAHN, PRESIDENT AND CEO, NATIONAL ASSOCIATION OF CHEMICAL DISTRIBUTORS
"Inflation may rear its ugly head in 2010. As a result of pent-up demand due to the downturn, there will be strains on an infrastructure that has been shrunk (production facilities, inventories, transportation). This will exacerbate people's ability to get raw materials, leading to shortages and rising prices. Chemical distributors' commodity business, which was down 30% by volume in 2009, should increase by over 10%. Neither climate change legislation nor TSCA (Toxic Substances Control Act) reform will become law in 2010, but a chemical security bill will."
LAURENCE ALEXANDER, CHEMICAL ANALYST, JEFFERIES & CO
"The two main themes in 2010 will be mergers and acquisitions and market share gains: M&A as commodity producers move downstream or try to acquire niche specialty technology positions; market share gains by larger players as they leverage preferential access to the capital markets. Plus, companies will start to shift their regional strategies well in advance of any EPA [Environmental Protection Agency] action on greenhouse gases, which may also lead to acquisitions of more environmentally friendly technologies by the larger incumbents."
ROBERT BAUMAN POLYMER CONSULTING INTERNATIONAL
Oil prices will hit $100+ by the third quarter, but US natural gas prices will not increase. US and Western Canada will have a strong export advantage compared to naphtha-based producers. Middle East producers will set prices based on their costs which are ethane based and not oil/naphtha-based due to the need to displace existing exporters. We will reach the bottom of the petrochemical cycle by mid-year but could stay there for another year.
HERE IS A SELECTION OF LAST YEAR'S PREDICTIONS:
"2009 will be the year during which solar energy will really be put on the world map as a viable alternative. This represents a major opportunity for the chemical industry to deliver the material-based solutions that will enable more efficient and cost-effective manufacturing technologies for this key future industry."
Eric Peeters, global executive director, solar business, US-based Dow Corning
"At 2:32 in the afternoon of Thursday, January 29, 2009, a purchasing agent at a major convertor will place the order that will reverse everything and start the ball rolling and momentum to recovery."
Kevin Swift, chief economist, US trade group American Chemistry Council
"2009 will be the most challenging year in the chemical industry for 50 years. Chemical producers and distributors who have strong balance sheets, low debts and lean organizations will be the industry winners and future beneficiaries of the crisis."
Marc Fermont, senior partner, Switzerland-based consultancy DistriConsult
"Today, companies and their senior managements are relatively unprepared for the arrival of a major downturn. Everywhere one looks, there are signs of distress in key chemical markets. Plus, banks are still being forced to de-leverage after the 'liquidity party' from 2003-2007, and so even good-quality borrowers are finding it difficult to access cash."
Paul Hodges, chairman, UK-based consultancy International eChem
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