Editorial December 2021 Let bygones be bygones Lets welcome 2022 with a smile

Rajiv Parikh

23 Dec 2021

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.

Year 2020 and year 2021 was a blow for most of the sectors due to the pandemic but was a successful year for pharmaceuticals and few sectors in the chemical industry. However, we see 2022 poised for a strong recovery as economies reopen and restrictions are lifted. Strong demand for both commodity and specialty chemicals should keep prices robust. However, the industry could face margin pressures and raw material cost inflation, which will likely remain high till the middle of the year.

Many chemical companies will also look forward to focus more on sustainability, de-carbonization and recycling technologies to lower the carbon footprint and also reduction in plastic waste. There are a few things that has happened in the past 2 year which has changed how businesses are conducted.

1. Digital Transformation: 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 efficiency 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.

2. Reduced Labor: Due to the digitalization and the Covid19 pandemic, the chemical workforce will not reach the precovid levels unless there is an expansion of the portfolio products. As demand increases, employment is expected to recover but might take more than a year to be normal.

3. Supply Chain Issues: will continue to rise as labor shortage is a key factor. The efforts are underway to address the issues of workforce in the shipping and trucking industries and congestion at ports across the world.

4. Sustainability: In 2022, the chemical industry will likely be pushed to de-carbonize 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,  dvances in de-carbonizing chemical production could have a profound impact globally. The benefits of de-carbonizing chemical companies could spread beyond the industry itself, since chemistry provides the building blocks for many value chains.

Bottom-line is no one exactly knows what will occur in 2022, but most observers believe that the recovery will continue.

 

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