BLOG: Alice in Wonderland, the Cheshire cat and the chemicals industry

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

Alice asked the Chesire cat perched in a tree, “what road do I take?” to which the cat asked, “where are you going?” Alice admitted, “I don’t know.” The cat’s response was, “then it doesn’t matter. If you don’t know where you are going, any road will get you there”. Lewis Carroll’s Alice in Wonderland, published in 1865, has always been more than just a fabulous children’s story.

Such is the plight of some chemicals companies as they recognize the need for change, but don’t know exactly what change looks like as they struggle to decide which road to take.

I see the problem here as being bogged down in the details, getting stuck in the weeds, when the details are simply unknowable right now. But what we do know and must determine at the C-suite level – and this would then trickle down to every level of organization – is the overall direction. The details will sort themselves out later.

See today’s blog for a reminder of the ten interconnected reasons why I believe that the Chemicals Supercycle is over. Click on the links in the slide for the relevant background.

The first question each commodity chemicals company needs to answer is this: “Can we continue to compete in the global commodity chemicals space, or do we instead need to become a niche, higher-value player?”

There will be many, many shades of grey between these two extremes. But C-suites should start with a binary choice as I believe that:

• The truly global and ever-expanding commodity players are likely to be in the Middle East, the US and Canada only because of feedstock advantages – and connected to feedstocks, the push to convert more oil into chemicals.
• We don’t know whether China can be a major global export player in commodity chemicals (maybe in some value chains where it is already the dominant player) because of geopolitics. What seems clearer is that by itself, and with its geopolitical partners, it is likely to continue its push to greater commodity chemicals self-sufficiency.
• This leaves the rest of the world – barring a few state-owned oil-to-gas-and-chemicals majors in regions such as Southeast Asia – facing the challenge of becoming more niche.

So, you are Alice.  You have returned to the tree, having decided where you want to go. You ask the Cheshire cat, me, what route to take. All I will say here is “meow”. For more details, contact john.richardson@icis.com.

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.