BLOG: Global styrene markets reflect permanent changes in the chemicals landscape

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

So, you want to just sit back and wait for global chemicals and polymer markets to correct themselves, for the Old Normal to come back?

As today’s post on styrene suggests, even assuming thins do eventually return to normal, you will be on for an awful long wait:

• I estimate that global styrene capacity would have to shrink by an average 174,000 tonnes a year between 2024 and 2030 for operating rates to reach their historic and very healthy long-term average of 88%. The ICIS base case assumes an average 2024-2030 operating rate of 75% as capacity expands by 811,000 tonnes a year.

Clearly, and this is same across many other products, the commercial decisions necessary for a turnaround on this scale would take several years.

But I anyway see hanging around and waiting for a return to the Old Normal as a waste of precious time, as the global chemicals landscape will never return to the way it was during the 1992-2021 Chemicals Supercycle.

The data on styrene underlines the direction of travel including, as mentioned, the scale of global overcapacity and the collapse of Northeast Asian margins since the late 2021 “Evergrande Moment”.

Also note the distorting impact of China dominance of global styrene demand. In 1992, China accounted for just 2% of global demand and 22% of the global population, but by the end of this year ICIS expects China to account for 46% of global demand from just 18% of the world’s population.

And crucially, China’s demand growth is shrinking as its share of global capacity increase – again just 2% in 1992 rising to a forecast 53% in 2030.

The numbers are similar across many other products.

It is time for chemicals companies to think long and hard about where their future competitive advantages lie in the light of the ten interconnected forces that I believe are reshaping the global landscape.

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.