Chemical manufacturer is slowly but surely regaining their mojo

After a period of silence, the chemical industry is slowly and steadily recovering its charm. After being at the wrong end of the global economic crisis, this highly cyclical industry is finally struggling in difficult waters. In 2018, driven by the U.S. market, the global chemical industry is expected to usher in a good start. The rebound in oil prices, large-scale capacity expansion of C2 / C3 and derivatives, and large-scale ethane exports to the East will be the main driving forces for the profitability of the industry.

Us favorable manufacturing policies are expected to boost domestic and export demand for chemicals and derivatives in 2018. In Europe and the UK, the industry is expected to remain depressed due to high operating costs and unfavourable operating margins. In the context of rising profit pressure and changing demand patterns, Europe is expected to become a net importer of several chemicals. Asia is expected to be driven mainly by India and China. However, China’s stricter environmental regulations will be the focus of the discussion. These laws will lead to higher costs for domestic chemical manufacturer in China.

Chemical manufacturers will continue to strategically adjust their product mix by divesting non core businesses and businesses that are responding to weak demand. In 2018, the oil and gas industry will continue to witness strong M & A activities as companies continue to seek strategic partnerships to leverage the size and synergies of the entire portfolio. In addition, cost cutting measures and the need to stay ahead will continue to be the main focus areas of chemical manufacturing enterprises.

Some commodities will remain tight, while others will be well supplied. Titanium dioxide, caustic soda and hydrochloric acid will remain at high prices, while ethylene, propylene and methanol will still exist in large quantities.

All in all, the industry’s momentum will continue until 2018 and beyond, supported by continued strong key demand areas, improving world economy and shale related capital investment. Driven by India and China, the demand for us shale in the East will be the main topic in 2018, as China’s new cracking furnace may be fueled by us shale. Increasing attention to cost, productivity and operational efficiency, and expanding through acquisitions, will help chemical manufacturers survive in this unstable environment.