Surviving The Crisis Depends On How You React

Business, China, Company Strategy, Economics, Oil & Gas

By John Richardson

PEOPLE make up chemicals companies – not just ever-more ingeniously assembled molecules. So how people react from now onwards will determine whichCMyHYdgWoAE7nZl companies survive and which companies fail in the New Normal.

The people who are on the boards of the world’s chemicals companies need to tear up their strategies and start again, if they haven’t done so already.

As I said on Wednesday, building this new strategy for China needs to start from the top down, from thinking about what it will need over the next 20 years and how this is changing compared with the previous 20 years.

My Wednesday post focused on China’s environmental needs – cleaning up its water, soil and air, which is a $1 trillion opportunity over each of the next five years, according to China’s government.

And affordability will dominate everything – from providing these environmental solutions to providing the chemicals and polymers that go into the many hundreds of millions more TVs, refrigerators and washing machines that will be sold in China over the next ten years and more.

The chemicals companies which will gain big volume sales in the future will not be the chemicals companies that focus on luxury goods, as it was always entirely wrong to believe that China was rapidly becoming middle class by Western standards. It will instead be the companies with the know-how and the cost efficiencies to supply the raw materials to make say a good quality smartphone that retails for $200 or less.

More immediately, though, companies will be in panic mode if they didn’t see the events of the last few years and weeks coming.

They might be panicking because they thought that somehow the 7% official GDP growth rate that China posted in Q2 made sense, based on their reading of the underlying growth trends. So now they will be shocked as more and analysts suggest that real growth is likely to be in the low single digits. Fathom Consulting this week, for example, put growth at 3.1%.

They will be shocked by China’s decision to allow the Yuan to devalue because they again didn’t think that growth was that bad in China.

And they will also be panicking if they didn’t think that oil prices could go much lower. But now prices are tumbling as supply and demand realities become fully exposed.

How individuals respond over the next few weeks, months and years is therefore, as I said, crucial in the success or failure of chemicals companies.

For the right advice on how to move your teams in the right direction, both in the short and long term, contact ICIS Consulting at john.richardson@icis.com

PREVIOUS POST

Time To Scrap Old Thinking On Oil Markets

20/08/2015

By John Richardson A SEASONAL fall-off in demand for oil, rising concerns over t...

Learn more
NEXT POST

US Petchems: Last Piece Of Expansion Logic Fades On Falling Crude

23/08/2015

By John Richardson THE demand was simply never going to be there to support anyw...

Learn more
More posts
China’s shift towards styrene self-sufficiency adds to pressure for new petrochemicals business model
09/08/2020

By John Richardson IT IS dead simple, apparently. All you have to do is find alternative geographica...

Read
Why a hard look at the data show China has not seen a V-shaped recovery
06/08/2020

          Note: All the data comparisons below are year-on-year By John Ric...

Read
China moves closer to Iran as tensions with the US build: Implications for petrochemicals
02/08/2020

By John Richardson Opinions and emotions and can shape how we interpret data, but, as we all know, o...

Read
China polyolefins market H1 review: so far so good, but beware of the risks ahead
30/07/2020

By John Richardson ALL looks fine in the polyolefins world. The Old Normal appears to have reasserte...

Read
Polyethylene market recovery could be threatened by slower China crude buying, weaker economic growth
28/07/2020

By John Richardson EVEN by China’s standards, where just about every number is eye-wateringly larg...

Read
Why the polypropylene industry must switch from volumes to value
26/07/2020

By John Richardson EVERYONE knows about the oversupply in the polyethylene (PE) market as it has bee...

Read
China consulate closure underlines long-term split with US, potential big shift in petchems trade flows
23/07/2020

The views in this blog post are, as always, my personal views and do not reflect the views of ICIS. ...

Read
China’s real GDP could have been negative in Q2: What this may mean for PP
22/07/2020

By John Richardson CHINA’S official GDP growth of 3.2% for Q2, which was announced last week, may ...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more