Chemical Sector Is All Set For Change, Says Atradius

A major shift in the competitive landscape of the chemical industry is underway, reveals a report by trade credit insurer Atradius.

Atradius reports that developing end markets are shifting towards new value streams, sustainability and technology as they look at potential opportunities for growth. Overall, the global outlook for chemical production is positive, with an above average growth of 4.4% expected in 2021 when compared to pre-pandemic years.

However, further analysis reveals a disparate picture around the world. While growth is expected to be largely dominated by emerging markets, with China seeing a 3.4% increase in production volume in 2020, chemical production declined by 2% in the EU, 4.6% in North America, 9.8% in Japan and 1.1% in South America.

Emyr Jones, sector expert at Atradius, explained: The chemicals industry is vulnerable to wider political and economic events, such as the surging prices of wholesale gas which has hit energy-intensive manufacturers, even causing some to temporarily close operations. Inflationary pressure and supply chain disruption is expected to persist. But notwithstanding any potential widespread reintroduction of lockdown measures, the recovery of other industries including agriculture, construction, consumables and health, should underpin global chemical demand.”

The Atradius report also notes a key feature of the global chemicals market is the shifting nature of its value streams, driven by new-product demand in a range of industries such as materials for microelectronics, construction applications, recycling technologies and new solvent cleaning technologies. Such end-market diversity and development should prove beneficial as it harnesses diversification of production and customer portfolios as well as helping to moderate the impact of recession.

From a sustainability perspective, environmental and social governance (ESG) issues are at a tipping point for the chemicals industry with both push and pull influences as firms respond to regulatory directives, customer preferences and boardroom guidance. These drivers are creating the need for additional investment in newer technology which leverage bio ingredients and are ‘eco-ethical’. As the chemical industry is a significant direct emitter of carbon, leading management teams have started to incorporate carbon and broader environmental targets into their agendas.

Meanwhile, Atradius reports the growing need for process efficiency is driving the adoption of technologies such as IoT sensors for both production processes and end-product performance as well as blockchain technology to enable supply-chain transparency and product traceability. Expansion in consumer markets and increasing demand for green, ethical products is also driving product development.

Emyr continued: “As the chemicals industry emerges from the uncertainties of pandemic-interrupted supply chains and the associated global recession, it faces a range of challenges and opportunities. Shifts in demand, caused in large part by changes in consumer preferences and increased environmental legislation, is driving technological advances across the industry. Looking ahead the industry remains buoyant, with the greatest potential for growth dominated by China and the Asian-Pacific markets. With major changes on the agenda ahead, this industry is certainly one to watch.”

For more information and a suite of free economic, payment and country reports, visit the publications pages of the Atradius website https://atradius.co.uk.

About alastair walker 10116 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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