15 October 2010 15:24 [Source: ICIS news]
By John Richardson
SINGAPORE (ICIS)--It is the biggest transformation that the global economy has probably ever undergone, resulting in numerous opportunities and challenges for the chemicals industry as emerging markets continue to boom.
The obvious opportunity is for those who can meet voracious demand growth. But where will the supply of affordable commodity chemicals and plastics come from to prevent this remarkable transformation from stalling?
Innovation will be key at the higher end of the business, as resource constraints create the need for new technologies.
Breakthroughs will be needed, for example, to raise energy efficiency and provide clean and safe water for the tens of millions of people who every year are migrating to ever-more overcrowded cities.
But while the long-term upward trajectory seems assured as the developing world displaces the west as the main global economic driver, medium and short-term dangers abound. The most obvious one right now is a currency war.
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“Traditional spreadsheet-based methods of measuring growth are no longer good enough by themselves. Some amazing disruptions are taking place that you need to be aware of in order for your old models to be thrown out so you can start again.”
Arguments being used include reducing what must be the enormous laundry bill incurred by the state-owned Indian Railways. And as the non-woven PP sheets and pillowcases are disposed of after one use, passengers would be guaranteed a clean bed.
Furthermore, it makes it very economically viable to recycle PP-made bed clothes, as there is only one collection point: the train's terminus.
An estimated 6bn people travel by rail in
But it has been estimated that if
And in many cases, these disruptive changes are not about sophisticated polymers, as in the case above with efforts to replace sacks made from jute.
The Gulf Cooperation Council (GCC) countries in the
In the case of Reliance Industries, it has a strong raw materials position thanks to its huge refinery capacity at
“We are spending a lot of time studying the economics of our coal-to-olefins process, while also evaluating the efficiency of competitors.”
It might not be too far a stretch to suggest that the
But 45-degree straight-line growth was never going to happen.
Property-market restrictions in
Inflation was still a big problem in
“Official inflation rates don't always reflect what's really happening because baskets of goods included in measures of inflation haven't been adapted to reflect changes in economies.
”The temptation may instead be to carry on with ultra-loose monetary policy in order to prevent currencies from rising too much, as everyone struggles to deal with the weak US dollar. This will cause bubbles to inflate even more.
“A full-scale currency war is my biggest fear, accompanied by increased trade protectionism – for instance, the recent US Congress vote on the yuan. This vote sends an important signal, even if it doesn't get past the Senate or a veto by the president.”
The dreaded double-dip recession might be almost upon us, unless we are lucky enough to escape for now thanks to an exceptional amount of inter-governmental coordination and compromise.
Whatever the number and the extent of the dips in growth over the coming decades, though, the overall dynamics seem irreversible.
One Singapore-based PP sales executive put it very neatly when he said: “Once you’ve got used to using stuff made from chemicals plastics, you are not going to turn back, no matter what your economic problems.
“If you have young children, why on earth would you want to switch back to using cloth diapers from disposal diapers?”
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