The Chemicals and Polymers Conference took place on 14th – 15th September and included sessions focused on base chemical, polymer, and key application markets, deep dives into emerging trends and technologies, and discussions on the hottest topics facing the industry.
Missed the conference? You can catch up with on demand access. Read on for 8 talking points from some of the key sessions.
#1. Industrial capacity is under pressure – but supply constraints will ease
Peter Martin, Director, Macroeconomics:
While global industry withstood the pandemic and recession relatively well, cracks are starting to appear amid the economic rebound. New orders are surging as major economies reopen, releasing pent-up demand, while Covid-related restrictions curtail manufacturing output in Southeast Asia. Producer prices are skyrocketing and delivery times lengthening as supply constraints bite.
However, this should be temporary. On aggregate, there is little to suggest that global industrial capacity has been destroyed by the pandemic. When demand moderates and restrictions relent, supply constraints should resolve.
#2. Chemicals and polymer industries face major uncertainties that have emerged or dramatically evolved in the last year
Matthew Chadwick, VP, Chemicals:
Our watch list contains seven potentially game-changing mega themes for the chemicals and polymer industries. For example, despite record profits recently, we face the prospect of widespread capacity overbuild and supressed operating rates in upcoming years. But not every chemistry is impacted as severely, and, ironically Covid-19 could give cause for positivity via project delays and upsides to consumption.
Longer-term, operators can no longer ignore the life cycle carbon emissions of their products but there are strategies for today that will set companies up for success. Emissions are inextricably linked to plastic waste and sustainability. This, and the chemical industries’ strong track record in collaboration, gives some confidence we can rise to the challenge.
#3. The pace of the energy transition will determine petrochemical feedstock availability, costs and inter-regional trade flows
The cost of feedstock is a key driver of petrochemical investment success, with gas-based feedstocks providing a strong competitive advantage along the olefins value chain when oil prices are high. The energy transition alters the dynamics of oil and gas demand, so could disrupt the oil and gas pricing relationship, particularly if the energy transition is accelerated.
In Asia, for example, most petrochemical feedstock growth is liquids-based, and therefore closely linked to the oils and refining market. Asian petrochemical investments will need to be deeply integrated with refining operations to achieve top quartile competitiveness and feedstock sustainability.
#4. Polymer applications are key contributors to a sustainable future – but significant investment is needed
Alexandra Tennant, Senior Analyst, PET & RPET:
We estimate that by 2040 up to 30 MT of primary packaging alone will be put into our ecosystems, a trend which is attracting significant market attention. Economies are reacting and shifting to promote more sustainable forms of consumption – driven by both consumers and regulation – and polymer applications will play a key role.
Significant investment will be needed to facilitate this shift to sustainability and circular economy. Many industries are already actively engaged in transition and investment platforms are looking to leverage this interest to drive catalytic change.
#5. Recycled polyester fibres won’t oust virgin fibres any time soon
Salmon Lee, Head of Polyesters:
Continuing overcapacity means virgin polyester fibres are increasingly competitively priced. Feedstocks (PX, PTA and MEG) for virgin polyester fibres are also oversupplied, so may become even cheaper. At the same time, recycling can be a costly affair – so virgin fibres won't be ousted anytime soon.
However, while it may be a fallacy to assume that recycling will replace virgin production, it's equally erroneous to assume that recycling (in any form) into fibres is just a fad. The sustainability effort is here to stay – and will only evolve and grow.
#6. Demand for recycled plastic continues to outstrip supply
Chloe Kinner, Research Analyst, PET & RPET:
Global trade of feedstock materials, as well as PET and recycled PET (RPET), has been restricted due in part to continued issues with logistics and soaring freight rates. This disruption of traditional trade patterns has made domestic and regional PET resin supply increasingly important.
Capacity additions, trade regulations and freight rates are the three key drivers that will continue to shape PET resin trade in the coming years. For recycled material, demand outpaces supply: major step changes in consumer behaviour are necessary to increase material availability. RPET markets will require significant investments to reach global demand as target deadlines approach.
#7. The chemicals industry needs to be ready for (almost) anything – proactive inventory management is crucial
Mariana Santos Moreira, Senior Research Analyst, Films & Flexible Packaging:
The past couple of years were nothing short of challenging, but also proved to be a huge learning opportunity for the industry. In one panel discussion it was noted that some researchers claim that socio-economic crises (like the one we have been navigating since 2020) happen every few years; with each cycle estimated to cut one full year of profits away from businesses.
How can the industry survive when the next crisis comes? The answer is proactiveness, forward planning and flexibility. Throughout the supply chain, from refining to textiles, preventive inventory management is a key learning point from these turbulent times.
#8. Long-term sustainability in the plastics chain is a necessity but a complicated issue to tackle
Darryl Xu, Principal Analyst, Asia Chemicals:
What does a sustainable plastics chain mean – no plastic, less plastic, or better plastic? A lot of pressure is on Big Brands to become more sustainable, with legislation helping to drive demand for sustainable solutions in the plastics value chain.
What are brand owners doing to support demand for sustainable materials and what role is there for governments and regulators? How is the entire plastics supply chain from resin producer to waste collector to recycler and finally, to the convertors and end users going to cope with the changing landscape? Does technology offer an easy route to success? How does plastic play a role in meeting longer term carbon targets?
These are just a few of the talking points from our two-day event series. You can catch up with on demand access.