GPCA ’22: GCC chemicals needs to leverage on strengths amid cyclical headwinds – GPCA chairman
SINGAPORE (ICIS)–The Arabian Gulf’s chemical industry will need to leverage on its unique strengths to counter short-term cyclical macroeconomic headwinds impacting its profitability, the acting CEO of SABIC said on Tuesday.
“Concerns over an upcoming recession are already impacting demand for chemicals. These concerns come from…volatility in commodity prices, worries over the security of energy and food supplies,” Abdulrahman Al-Fageeh, who is also the chairman of the Gulf Petrochemicals and Chemicals Association (GPCA), told delegates at the 16th Annual GPCA Forum in Riyadh, Saudi Arabia.
“These macroeconomic trends have led to a sharp decline in in the profitability of the chemical industry [but] I’m not surprised by this. It just reflects the cyclical nature of our industry but we at GPCA should note that our regional chemicals industry is more volatile than that of our global peers and requires some strategic actions,” he said.
The chemical industry is going through “uncyclical” changes that are fundamentally affecting its value chains, including the decline in globalisation which has resulted in fewer exports and changes in national policies, Al-Fageeh said.
“The situation is only worsened by a changing world order and geopolitical tensions,” he said. “I believe that the chemical industry needs to address both the cylical and non-cyclical challenges affecting our value chain,” Al-Fageeh said.
This includes further integration to capitalise on the synergies between upstream and downstream sectors in the Gulf Cooperation Council (GCC), enhancing collaboration within the industry and furthering decarbonisation efforts, he said.
More than half of the total production capacity in the GCC is run as a partnership, Al-Fageeh noted.
In terms of decarbonisation efforts, the chemical industry can reduce carbon emissions through efficiency improvements, electrification, and production of clean hydrogen, he said.
As for developing clean hydrogen projects, Al-Fageeh added that the GCC countries are “well-positioned to take the lead as they have the methane and underground storage facilities”.
The 16th Annual GPCA Forum runs on 6-8 December.
Front page picture: GPCA’s chairman
Abdulrahman Al-Fageeh during his opening
remarks on Tuesday
Focus article by Nurluqman Suratman
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