BLOG: Don’t put sustainability in a broom cupboard in the basement

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson.

Warning: Don’t put sustainability in the equivalent of a broom cupboard in the basement of your chemicals company HQ because profits from green and circular chemicals are today thin on the ground.

Companies in Europe, South Korea and Singapore etc. should perhaps instead focus on higher-value chemicals and polymers that address the challenges of reducing carbon and circularity.

They may have to in parallel close their commodity chemicals capacities down in a world of declining consumption growth.

Everything is connected. Don’t make the mistake of intellectually compartmentalising sustainability into, again, a broom cupboard as the energy and chemicals transitions are connected to other big picture changes.

In summary, this is how the chemicals world could look in just a few years’ time:
• Global chemicals demand has peaked and will from now on decline because of demographics, the end of the China “growth miracle,” downward pressures on consumption from sustainability, the impact of climate change on economies and maybe artificial intelligence.
• As demand shrinks, the feedstock-advantaged Middle East and the US continue to add capacity to gain bigger slices of a shrinking pie. So does China for self-sufficiency reasons.
• Chemicals companies elsewhere increasingly focus on niche, smaller-volume higher-value chemicals and polymers. They shut down commodities capacities and choose to import the commodities they need.
• Japan serves as an example of a country that is already travelling down this path.

Please don’t make the mistake of assuming that this is just another downcycle. The evidence instead points to a fundamental realignment of the chemicals industry.

If you think otherwise, you must believe that the chemicals industry is divorced from the rest the world when, of course, it isn’t.

Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.