Industry Trends & Challenges

Chemicals companies face a number of opportunities and threats to their businesses. The companies best placed to deal with a challenge will consider it as an opportunity, whilst those poorly prepared will face the challenge as a threat.

Before the COVID-19 crisis, there were several trends that chemical companies were responding to. As the industry recovers from the pandemic some of those trends remain, and some new challenges have emerged. Those include:

• circularity
• changing customer requirements
• decarbonization
• sustainability
• unfavourable macro conditions
• volatile feedstock prices

Chemical demand is different around the world, especially now that specific regions are responsible for a large proportion of global manufacturing. Therefore, chemical companies face the challenge to follow their customer industries. For example:

• new electronics factories in China and Thailand drive growth in demand for solvents used to clean components and connectors
• new car assembly plant in Hungary drives growth in demand for automotive paints and coatings
• the extraction of shale oil and gas from reservoirs in the US needs chemicals to prevent the corrosion of well casings, to reduce drill-bit friction, and to kill bacteria.

What is the current position of the chemicals industry?

The chemicals industry in 2023 is in a period of adjustment following the pandemic. Sustainability is now at the forefront of agendas, as they strive to minimize their environmental impact and ensure long-term viability. Many chemicals’ companies are anticipated to boost their investment in R&D capabilities and exploit developments in decarbonization and recycling technology.

The industry must also navigate unfavourable macro conditions, which present hurdles such as economic uncertainty, regulatory complexity, and volatility in feedstock prices, all putting a strain on margins.

The chemicals industry has historically been a slow mover compared to other sectors in terms of embracing digitalization. However, senior executives are growing increasing aware of the transformative potential of digitalization. By harnessing digital technologies, chemical companies can enhance their existing products and services while also introducing innovative ones. This presents opportunities for chemical companies to:

• achieve 24/7 AI powered customer service
• achieve proactive sales with AI based customer demand
• boost sales with data-driven R&D
• expand customer understanding and identify new markets/applications for products
• improve targets
• utilize advanced analytics for smart maintenance and greater first-time production.

Technology