ICIS WEBINAR: Pandemic to accelerate US chem differentiation

HOUSTON (ICIS)–The coronavirus pandemic is set to accelerate the US chemical industry’s differentiation into specialties, Rhian O’Connor, ICIS senior analyst, said.

O’Connor, speaking during an ICIS webinar on Wednesday, said that differentiation was well underway in the US before the health crisis.

She pointed to the Dow-DuPont merger/demerger, which was about differentiation and “picking markets that are exposed to mega-trends”.

The coronavirus will further speed up this trend, turning the US chemical industry away from building further basic polyethylene (PE) or other commodity chemical capacities.

“It’s all about differentiation, and this whole crisis speeded this up”, she said.

The crisis has not hit everyone equally. Some of the more differentiated producers were “doing really well” in the pandemic, she said, pointing to the packaging boom as an example.

CHINA TENSIONS
On the other hand, US producers of basic commodities, such as PE, would be hit hardest, she said.

She noted in particular the risk US-based commodity chemical producers face in China’s market, given that “America hasn’t had a great relationship with China”.

The coronavirus crisis worsened the relationship further, she said, adding that there is a possibility of “very high” import tariffs, taxes or antidumping duties in US-China trade.

ICIS deputy managing editor Zachary Moore noted that while China has recently eased tariffs on US PE, and US PE producers are selling good volumes to China, the recent worsening of relations could reverse this.

Adding to the bilateral tensions will be the US Department of Transportation’s (DOT) announcement on Wednesday of plans to bar Chinese airlines beginning in mid-June.

Meanwhile, China has fallen behind on its agreed purchases under the Phase One trade deal, and the US is removing the special status it grants to Hong Kong.

Additional reporting by Alex Snodgrass

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