LONDON (ICIS)--The four-week lockdown imposed by the French government last week will not bring the economy “to a standstill” like the one in the second quarter, with key downstream sectors operating normally, the CEO at French chemicals major Arkema said on Thursday.
Thierry Le Henaff said France currently accounts for only 8% of company sales, although he conceded the lockdown in the second quarter had greatly affected its operations, especially those of its adhesives and sealants division Bostik.
Arkema published earlier on Thursday its third-quarter results; despite improving from the second quarter, year-on-year sales and income fell sharply.
SECOND WAVE, SECOND
France was the first major economy to announce a new lockdown to stop the spread of the pandemic’s second wave, which is hitting Europe hard; Germany and the UK followed suit soon after.
But the lockdowns currently in place – Italy and Spain have also imposed restrictions to mobility but fell short of imposing full-on lockdowns – are less stringent than those in the spring, and several economic sectors continue to operate as normal.
Among them, building and construction, which are key sectors for Bostik.
“Sectors linked to building and construction gradually recovered over the summer and they are still doing quite ok. Because of that, for us this lockdown is quite different to the previous one, especially for Bostik which was greatly affected earlier in the year; it is doing quite ok now,” said Le Henaff, speaking to reporters from Paris.
“There is an element of uncertainty, however; nobody can really say what the consequences [of this lockdown] will be, but I feel we are not in the same position. There will be an impact, but the economy will continue to grow.”
Despite the improvement, Arkema expects sales in the fourth quarter to be 7% lower year on year, with its Intermediates division suffering the most, it said. Under that division in the third quarter, improving demand for polymethyl methacrylate (PMMA) could not offset worse metrics for sales of fluorogases or acrylics, the firm said.
Adhesives, sealants and coatings are expected to post healthy operations in the last quarter of 2010; performance polymers are expected to post “sequential improvement” from the third quarter.
Acrylics in China was one of the worst performing products among Arkema’s offering during the third quarter, but the CEO said the dip had to do more with conditions in wider Asia than China itself.
While China’s official figures show its economy is quickly recovering to pre-pandemic levels, other Asian developing economies are still reeling from the sharp fall earlier in the year in global trade in goods as well as stringent domestic measures to contain the pandemic.
“Overall, China demand is quite solid and, in terms of volumes overall, we are more or less at the levels of last year, although there are variations depending on the sector. In specialty chemicals, the situation is quite good – batteries, for example, is doing very well in what is becoming a very important market in China,” said Le Henaff.
Lithium-ion batteries are set to become key for transport electrification and are widely used in electronics; Arkema sells resins, carbon nanotubes, electrolytes salts and polymers to the industry.
“Acrylics [in China] is still volatile and is suffering from the worldwide economic conditions; Asian economies import many acrylics that are produced in China; it has had an impact in both [selling] prices and volumes, although this was overall expected,” added Arkema’s CEO.
“Asia [economic conditions] should however normalise. The situation is better than in the spring, and continues to improve. Perhaps is not exactly what we would like to see, but is heading into the right direction.”
EU GREEN PUSH: A BALANCING
The EU has set out plans to fully decarbonised by 2050, and the president of executive arm the European Commission wants industry to be diligent.
But the energy-intensive chemicals industry still lacks many of the technologies needed to be carbon dioxide (CO2) neutral, and its high consumption of electricity puts a burden in its emissions costs outlined by the Emissions Trading Scheme (ETS).
In an interview with ICIS, the head of European chemicals trade group Cefic said in September the EU’s Green Deal is “hugely challenging" for chemicals, adding that the EU should engage with the industry and set out realistic decarbonisation time scales.
The efforts the chemicals industry would need to make are immense; Cefic’s Marco Mensink said that, among others, by 2030 new technologies like bio- or carbon dioxide (CO2)-based chemistry, chemicals recycling, or electric crackers would need to be rolled out in order to meet the latest targets on emissions.
Le Henaff conceded there is “an element of discussion” regarding how far the chemicals industry can go, although insisted that both decarbonisation and chemicals can go hand in hand as the industry would be the provider of many of the materials needed for the endeavour.
“We take the EU green push as an opportunity, and we aim to improve the transparency of our products, of our production methods, and the sector has greatly improved its emissions record, water or energy use, etcetera,” he said.
“Beyond that, there will be opportunities for chemicals coming from the green agenda: in mobility, in batteries… You have to look at both sides: some CO2 emissions from chemicals can save more emissions from our customers.
“These are things we need to explain to the Commission [so they can see] what we are able to do [both in terms of decarbonising and providing greener materials]. The Green Deal goes on the right direction and we will continue to discuss [its implementation].”
Front page picture: A Paris resident cycles
down an empty street on Thursday
Source: Ian Langsdon/EPA-EFE/Shutterstock