PODCAST: Chems demand may never fully recover, focus on radical business models to survive

Author: Will Beacham

2020/08/03

BARCELONA (ICIS)--Chemicals demand may never return to pre-pandemic levels so a radical shake up in business models is required, with a focus on local supply chains, recycling, and meeting people’s basic needs.

  • Short-term “sugar lift” from furlough and unemployment schemes
  • As these end, could be major unemployment and social problems in H2
  • Polyethylene (PE) demand has been resilient as more low-paid people have had spare liquidity
  • V-shaped recovery in China is driven by production, not true downstream demand
  • Chinese companies have built massive inventory on expectations of higher future prices
  • Floods also dampening China recovery
  • Measuring economic recovery in percentage terms does not give true picture
  • Look at absolute figures to judge recovery
  • Demand may never return to pre-pandemic levels due to lower car ownership, less flying, ageing population
  • Could take a generation to fix the global economy
  • Chemical industry business models need radical shake-up for new opportunities
  • India needs to put in basic infrastructure of healthcare, education, sanitation before it can advance
  • If chemical industry can serve basic needs of developing countries it can unlock demand
  • Iran and China are developing a symbiotic relationship
  • $280bn investment by China in Iran could stimulate petrochemicals
  • US could be shut out of China export markets as it pivots to Iran plus Belt and Road countries
  • Re-shoring of supply chains driven by pandemic disruption, lower demand, circular economy

Listen to this podcast interview with John Richardson, senior consultant, Asia for ICIS and Paul Hodges, chairman of International eChem and author of the pH Report.

Interview by Will Beacham

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