The global chemical industry is in the wave of strong growth and high profit margin, but whether it can continue to maintain this momentum depends on how it responds to three long-term developments: advanced manufacturing technology, digital transformation and sustainable development.
The global chemical industry is in the wave of strong growth and high profit margin, but whether it can continue to maintain this momentum depends on how it responds to three long-term developments: advanced manufacturing technology, digital transformation and sustainable development.
For the global chemicals industry, 2017 is one of the best years since 2011. The revenue growth of the industry is impressive, the total industry profit margin reaches the highest level in history, most companies have good cash reserves, the terminal market recovers, and the demand prospect shows a positive short-term growth prospect. Of course, now is a good time for chemical manufacturer, but whether this growth momentum can be sustained in the medium and long term remains questionable. Three key long-term developments seem to be knocking at the door of chemical manufacturer, which may reveal new opportunities if companies respond in a rapid and strategic way.
The first is fuel chemicals (FTC) technology, which directly converts crude oil / natural gas into chemicals. Due to its huge chemical production, this technology has great subversive potential for the future of chemical manufacturing industry. Given this situation, companies belonging to different categories should respond differently. Natural owners should not only further integrate their Petrochemical assets and refineries (to achieve higher synergy), but also cooperate with process technology companies and enter the "differentiated commodity" space. While some differentiated goods companies can explore reverse integration through the FTC route, others adopt a service-oriented "solution" approach to meet changing customer needs. Solution providers can follow the same strategy as differentiated goods and re focus on changing their solution packaging and pricing strategies.
The second key long-term development, digital transformation, has the potential to change many aspects of global chemical enterprises. Although highly diversified companies have made use of digital technology in many functions, they need to strike a balance between over investing in numbers and treating digital initiatives as low-key. By adopting an appropriate digital operation mode, recruiting and developing digital talents, investing in advanced and compatible digital technologies, forming a "digital mature" culture with the support of senior leaders, and being alert to digital subversion in the terminal market, enterprises may make the best use of the power of digital transformation. The successful use of digital technology can also enable enterprises to achieve leapfrog development between different categories. Although the category of company may determine the scope and scale of digital transformation, chemical manufacturers should always strive to envision new uses of digital.
The third key to long-term development is sustainable development and circular economy. Chemical manufacturer can not only help solve the sustainable development challenges facing the end use industry, but also seize new opportunities to become part of the solution. In addition to investing in new technologies and developing new materials, chemical manufacturers should work with suppliers, regulators and customers to make solutions for energy and material efficiency related to "ecosystem wide" problems and develop new methods - for example, exploring new business models such as service heavy chemical leasing, having the whole circular economy cycle, redesigning products and processes with customers, Establish a special supply chain for advanced materials. The obstacles to the challenge of sustainable development can be overcome by choosing a starting point that is not troubled by inertia. For example, natural owners may find it easier to integrate technologies that enable energy capture, storage, and use in their daily operations. Differentiated goods may invest in recycling technology and infrastructure to own the entire circular economy cycle. Solution providers don't even need to have the products, technologies or services they need to provide packaged solutions for sustainable development problems.
How these three key long-term developments affect the global chemical industry and these three categories remains to be seen. We hope that through this article, we will not only cover the potential impact, but also the reasonable strategic response to these long-term developments, which may change the pattern of the whole global chemical industry by 2030.
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