Chemicals industry is witnessing revival all over the world after the global economic recession by spurt in demand. Shifting from oil based feedstock to gas has given chemical companies in developed world a sharp cost advantage making them competitive to their Middle East oil based counterparts. This has given rise to global competition and companies are eyeing to enter into each other’s markets more than ever. Emerging markets have presented themselves as the new playing ground for these companies leading the growth in demand of chemical production.
Key trends shaping the Chemicals Industry
Rise in demand all over the world: Different factors are operating in different parts of the world but all are contributing to the same direction- robust rise in demand. Oozing out of fiscal stimulus has decreased chemical production in emerging economies but it still remains the highest in the world. US chemical industry is revived by cost advantage from gas and South America is witnessing demand due to rise in infrastructure investments.
Search for alternative feedstock: As chemical companies of developed world gain cost advantage and try to make inroads in emerging markets, local companies are searching for alternative sources of feedstock to reduce their dependency on volatile oil based naptha to become equally competitive.
New aspect of innovation: As customers want cheaper products and shorter time to market, chemical suppliers are shifting focus on optimizing their processes, creating new blends of chemicals and reflecting back on their business models. Specialty chemicals companies are the most affected by this trend due to severe drop in margins.
Challenges facing the players involved in the Chemicals Industry
Adjusting global supply chains: Decreasing margins are forcing specialty chemical companies to shift their sourcing destinations to become lean and focusing on Asian markets to drive sales. This requires shift in global supply chain strategies to design a flexible model of doing business with changes in markets.
Sustaining innovation: Rapidly changing landscape has already provided short term force to innovate in physical and chemical properties in chemicals production. Long term drive for innovation will come from shift to alternative sources and shifting demand from emerging markets as they mature. Companies need to experiment new ways during the boom times so that they have built competencies to accommodate the new wave of change and are ready to deliver with more agility.
How can BMGI help?
BMGI’s extensive association with chemical companies has provided deep insights into the improvements possible in operations and supply chain activities. Implementation of new technologies has helped in retaining customers and has shortened delivery times by significant percentages. BMGI has helped numerous chemical companies in achieving differentiated edge over their competition by designing and implementing sustainable strategies. As the next wave of dominance by emerging markets arrives, BMGI remains the best companion to leverage growth in the coming decade.
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