BLOG: Stop wasting time waiting for the end of the downcycle

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

STILL WAITING FOR the end of the chemicals downturn? If so, I believe you are wasting precious time. Read in detail in today’s blog and see my ten summarised reasons below. Print this off and pin it on your boardroom wall:

1. Most of the G20 countries, which account for more than 70% of global polyethylene demand (chemicals and polymers are equivalent to economic activity) is ageing.
2. Immigration is of course the answer to some extent, but this is politically very difficult in the West.
3. In the regions and countries where populations are youthful, not enough people – because of politics in the West – are likely to be able to move to the rich world for better economic opportunities, and to escape conflicts and the effects of climate change.
4. Climate change will more likely be successfully mitigated in the rich world. But the risk is that the Developing World ex-China does not get the financing and technologies it needs to mitigate the impact of climate change.
5. China is the immediate centre of the crisis for the global chemicals industry because global capacity was added on wrong growth assumptions. China’s chemicals demand growth could turn negative because of an ageing population, the end of the real-estate bubble and geopolitics.
6. Geopolitics mean that we are likely to see a change in chemicals trade flows. A bipolar world – one centred on China and its allies and the other on the US and its allies – is one outcome
7. The oil and gas majors could end up dominating chemicals to compensate for declining oil demand due to electric vehicles and fuel efficiency, as China moves to chemicals self-sufficiency by itself and/or with imports largely from its geopolitical partners in the Middle East
8. We are in the early stages of a new industrial revolution driven by sustainability
9. As was the case with the start of the first industrial revolution, it is impossible to say what will be the winning and losing technologies.
10. For chemical companies without strong feedstock advantages, without the right geopolitical locations- and which have too much exposure to the diminishing China import markets – it is success in sustainability that is the route to new competitive advantage.

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.