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2022 Global chemical industry Vision

2022 Global chemical industry Vision

2022 How is Global chemical industry Vision?

In this article, we are going to talk about the 2022 global chemical industry vision and examine it from different angles. The global chemical industry has witnessed a strong recovery since the beginning of 2021, and 2022 could mark the full recovery for the industry pre pandemic. From sustainability to consumer-centricity, our annual outlook explores five trends that will be top of mind for chemical companies in the year ahead.

A renewed focus on sustainability 2022 Global chemical industry Vision

As the chemical industry moves into 2022, strong demand for both commodity and specialty chemicals should keep prices robust throughout the year. The industry should also experience increased capital expenditure as leading industry players focus on building capacity and expanding into growing end markets through both organic and inorganic routes. However, the industry could face margin pressures amid raw material cost inflation, which will likely remain high through the first half of 2022.

One of the critical areas of focus for most US chemical companies in 2022 will likely be sustainability and decarbonization. Many chemical companies are expected to increase investment in research and development (R&D) capabilities and leverage advances in decarbonization and recycling technologies to lower their and their customers’ carbon footprint, as well as reduce plastic waste. As a result, 2022 should see more industry players create goals and plans around abatement of emissions and monetization of waste. Learn more about what lies ahead in our annual industry outlook.

1- End-Consumer market growth

Positioning for a strong rebound in key end markets amid rising costs

The chemical industry is poised for a strong recovery in 2022 as economies reopen and restrictions are lifted, which should drive up plant utilization rates that were hit hard by the pandemic. US chemical volumes are expected to grow around 1.5% in 2021 and 3.0% in 2022, while shipments will likely increase by 8.0% in 2021 and 2022, following a 13.5% decline in 2020. US chemical exports are also expected to grow significantly as major economies reopen and import demand in partner economies improves.

But one of the risks for this strong recovery is inflation. For example, Brent crude oil spot prices rebounded strongly and remained at an average of $74 per barrel in September 2021. Those inflation figures provide further evidence that the supply of raw materials and labor is struggling to keep up with resurgent demand. Central banks in the United States and Europe expect supply bottlenecks and inflation to ease in 2022 once the global recovery finds firmer footing and government support programs are unwound.

2-Shifting demand

Transforming asset portfolios to help weather volatilit

Chemical companies are entering 2022 after overcoming challenging market conditions in 2020 and 2021, with COVID-19 adding volatility to an already volatile decade. The pandemic led to divergent demand for plastics and specialty materials, testing the resilience of companies’ asset portfolios. The shifts in chemical spending partially reflect commodity price volatility, but are more driven by longer-term trends, including petrochemical expansion in the US Gulf Coast. 2022 will likely see similar price and demand volatility, and the chemical sector will need to adapt, particularly as the energy transition accelerates.

Chemical companies are likely to focus on repositioning their asset portfolios and balancing trade-offs between different strategic options with critical considerations, such as scale, the scope of products, and growth opportunities.

3-Stability

Climate change driving sustainability efforts

In 2022, the chemical industry will likely be pushed to decarbonize by regulatory and scientific pressures as the impacts of climate change grow more apparent. Moreover, the industry may come under further scrutiny as the public becomes increasingly sensitive to plastic waste and the improper disposal of end products.

While carbon emissions are hard to abate in the chemical industry due to reliance on process heat, advances in decarbonizing chemical production could have a profound impact globally. The benefits of decarbonizing chemical companies could spread beyond the industry itself, since chemistry provides the building blocks for many value chains.

4-Digital transformation

Accelerating business transformation through digital technologies

There remains immense, but relatively unexplored, potential for advanced data analytics and digital technologies to transform the chemical industry. Today, digital tools and technologies present an economically feasible solution for extracting more efficiencies from incumbent processes and designing novel products and processes. Due to the convergence of accelerating improvements, such as advances in sensors, cognitive computing, and analytics, significant progress can be expected in three areas in 2022: data availability, data processing, and engineering and materials research.

In the past, chemical businesses have typically implemented advanced data analytics and digital initiatives in silos, resulting in slower processes, higher costs, and uncertain benefits. However, chemical firms are now increasingly realizing that digital transformation is about implementing more and better technologies and involves aligning culture, people, structure, and tasks.

5-Customer-centricity

Embedding customer-centricity to create differentiation in the marketplace

Customer expectations and behaviors have changed dramatically over the past decade, and more so in the wake of COVID-19. Chemical businesses today are expected to meet customers’ needs and expectations at every interaction in return for customer loyalty. The ability to deliver this could depend on the extent to which customer-centricity is embedded within every link in the value chain in the chemical business.

Especially in light of the convergence of many industries that are rebranding and repositioning themselves, customer-centricity should play an instrumental role in staying a step ahead of the competition. Chemical companies are likely to leverage digital technologies to enable automated trend sensing and social media scanning to identify broader market trends and customer requirements. This customer-centric innovation, which solicits real-time feedback through customer engagement tools, could help improve the scope, scale, and returns of R&D efforts.

Source: This article has been prepared and submitted from deloitte.

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