GPCA ’19: Chemical industry challenges can turn into opportunities

DUBAI (ICIS)–The petrochemical industry is facing some very significant challenges in the shape of weak economic growth, trade wars and protectionism, climate change, growing public anger over plastic waste disrupting marine life, disruptive technologies and digitization, to name just a few.

Yet a closer look at most of these challenges shows there are great opportunities for businesses to overcome them, and benefit from them, provided the industry recognize their potential.

Industry leaders at the 14th Annual Gulf Petrochemicals and Chemicals Association (GPCA) Forum in Dubai detailed the major issues confronting the industry and suggested possible solutions.

“In this environment, cooperation will be crucial because the challenges are global in nature and complex in their make-up,” said ExxonMobil Chemical Co president Karen McKee, while identifying three key trends that will impact the industry.

These are the massive rise in the global population, the need to innovate products, and the drive for sustainability in every aspect of life.

According to general estimates, the world population will grow to 9bn people in the next quarter of a century from 7bn currently. This will, in turn, result in a dramatic rise to demand for all sorts of products.

For LyondellBasell CEO Bob Patel, digitisation is one of the four key forces that will shape the petrochemical industry going into the future.

For him digitization ranked with globalisation of trade, sustainability and plastic waste as major forces that will drive the future of the industry.

Apart from the quest for globalisation and sustainability, dealing with plastic waste is also on top of the industry’s priority list.

“The issue is not plastics. It is plastic waste and how we dispose it after use,” Patel noted.

“I know these forces are powerful, they cannot be ignored and somehow they will shape our industry going forward,” Patel said.

Some of these changes will have negative impact on the industry, but others may have beneficial effects.

For instance, 100m people each year enter the middle-class population, which drives the growth in consumption of products made from chemicals. This underpins McKee’s confidence in the long-term growth of the industry.

For Yousef Al-Benyan, chairman of the Gulf Petrochemicals and Chemicals Association (GPCA) and CEO of SABIC, the solution to a lot of challenges would be forming strategic partnerships.

“Selecting a right strategic partner is not easy. It requires a lot of strategic planning, but if executed intelligently, this model offers strong strategic advantages to steer through the challenging times,” he said.

He also identified weakness in the global macro-economic environment; geopolitical tensions; the escalation of the US-China trade war which was disrupting supply chains; climate change action; and technological disruptions as major challenges for the industry.

“The cumulative effect of these uncertainties makes it difficult to make decisions,” he noted.

The way forward for him was to identify and establishing strategic partnerships and collaborations.

“Amid cyclical and structural challenges, more and more companies are aspiring to realize growth through restructuring and consolidation. This upward shift in partnerships will continue. Strategic partnerships have always helped the chemical industry to develop robust business models and generate consistent returns,” Al-Benyan said.

For several participants at the GPCA forum, while every issue facing the industry was significant if not critical, it also offered a way to turn it into an opportunity for growth and sustainability.

It depends on how companies – individually or collectively – deal with the challenges.

The GPCA Forum is being held in Dubai on 3-5 December.

Thumbnail image source: Etienne Laurent/EPA-EFE/Shutterstock

Focus article by Tahir Ikram

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