The specialty chemicals business, like others, has spent the previous few months focusing on safety, operational risks, supply chain interruption, and meeting financial responsibilities. Chemical manufacturing continued during the epidemic due to the necessity of output. Regardless of the scenario, people needed to eat, drink, and bathe, therefore packaging played and will continue to play an important part in the months ahead. As a result, we expect COVID-19 to have a little impact on the packaging business.

In the building industry, current market conditions are having long-term detrimental implications. Canceled and delayed projects, as well as decreased demand for non-essential projects such as entertainment and sports facilities, are among the disruptions. This has an impact on the need for construction chemicals including concrete admixtures, asphalt emulsions, waterproof coatings, and insulation foams, among other things.

Electronic specialty chemical manufacturers are also planning for a medium-level impact. Despite production and shipping issues, the electronics industry has been relatively unaffected. Short-term manufacturing disruptions are still predicted, as governments mandate the shutdown of non-essential output.

The already troubled car industry is under even more pressure. In 2020, experts predict an unprecedented and nearly instantaneous stopping of demand. Volkswagen, Audi, SEAT, Ducati, Porsche, and other brands in Europe's automobile industry are temporarily shut down. Even if manufacturing resumes, enterprises that rely on Chinese parts and materials would remain vulnerable and may be forced to close owing to a shortage of parts. The specialty chemicals used in the automobile industry, along with other suppliers, are projected to be severely impacted.

Read More :- https://www.pukkapartners.com/insight/specialty-chemicals-prices-and-its-impact-on-global-trade-due-to-covid-19

COVID-19 has an impact on the long-term chemical and material trends

Consumers are placing higher importance on sustainability and, as a result, are choosing items based on factors like circularity and carbon footprint. Furthermore, consumer concern about carbon emissions has prompted increased investment in renewable energy, energy efficiency, and transportation decarbonization. These developments have had a considerable impact on chemical end sectors, particularly in the automobile and construction industries. COVID-19 has exacerbated the situation by lowering the automobile and construction industries (as well as many others) and disrupting current supply lines.

The adoption of digital technologies by oil, gas, and chemical firms has been fueled primarily by cost savings and greater reliability. Many organizations in these areas saw excellent benefits from advanced market sensing, improved operational optimization, and expanded usage of "in silico" simulations. Companies' existing digital technologies provided an advantage with the abrupt entrance of COVID-19 and the accompanying shutdown of facilities and worksites, but they were often insufficient for the level of remote working and cybersecurity that was suddenly required.

Finally, the pandemic-related shutdown combined with the oil price crash in March 2020 exacerbated the oversupply scenario that several US chemical industries were already experiencing. The economic downturn lowered demand in both domestic and international markets. Furthermore, the drop in oil prices reduced the cost advantage that US petrochemical companies had due to their reliance on local ethane, potentially making their products less competitive in an already challenging market.

Following COVID-19, chemical company leaders should assess how long these changes will last, determining which are likely to accelerate and provide new opportunities, and which are likely to slow and have an influence on their operational environment. We present four scenarios that, while not prescriptive, highlight some significant indicators to watch in the chemicals business and potential opportunities for growth.

Major Effects of the Crisis

1. Supply disruptions and demand shocks have accelerated oversupply and imbalances: The chemical industry has rushed into an oversupply crisis that was already developing before Covid. The automotive, transportation, and consumer products industries have been affected the hardest, with chemical demand plummeting by up to 30%.

2. Shifts in chemical feedstock pricing have shifted the worldwide competitive order.

The price of crude oil fell to its lowest level since the Gulf War began in 1991 last month. The price of chemicals feedstocks and the worldwide competitive order shifted dramatically as a result of this decline. The United States, which is losing its cost edge due to shale gas, and the Middle East are the hardest hit. Lower input prices are compensated by lower output prices, which has conflicting implications on Asia, with China being the world's largest importer of crude oil.

3. Supply chain deglobalization

Chemical businesses have begun to (partially) shift or ramp up manufacturing of vital chemicals supplies and medical items closer to end customers in reaction to large supply chain disruptions (for example, pharmaceutical active ingredients, disinfectant gels, masks). Supply networks were already being impacted by trade tensions and structural sector developments.

4. A push for a contract in a market that can often be dormant

The chemicals M&A market has come to a near standstill, which is a significant change from recent years. However, with prices at peak levels and a lowered demand picture prior to the pandemic, this catastrophe may deliver a boost to a market that could otherwise have stalled.

Major Market Highlights:

Capital Paints LLC, a UAE-based thermosetting powder coatings producer, has been acquired by Xalta, a leading global supplier of liquid and powder coatings.
Dexmet Corporation, a provider of specialty materials for surfaces in aerospace, automotive, and industrial applications, was acquired by PPG.
ArrMaz, a global pioneer in specialty surfactants for crop nutrition, mining, and infrastructure applications, was acquired by Arkema.


Email / Call Us at :
[email protected]
APAC: +91 70226 21355
United States: +1 858 939 9252