Recent economic and technology trends have had major impacts on the global chemicals industry. This applies to both the specialty chemicals and bulk chemicals sectors. The industry has also seen an increase in merger and acquisition activity in recent years, and this trend is likely to continue.
Chemical & Materials Industry Overview
The current low oil and gas prices, particularly in North America, have had a major impact on the industry, since both are key feedstocks for both specialty and bulk chemical production and provide much of the energy (either directly or indirectly) for these energy-intensive sectors.
While, until recently, North America had seen few greenfield or expansion projects for specialty chemicals and virtually none for bulk chemicals; the competitive advantage provided by shale oil and gas created a wave of activity in both greenfield and capacity expansion projects.
In general, there's been a trend for global bulk and specialty chemicals manufacturers to shift production from well-established production centers in Europe, Japan, and (to a somewhat lesser degree) North America; to cost-advantaged China and India and feedstock-advantaged Saudi Arabia, which has been making a major push to increase the value of its exports and diversify its economy. We're seeing significant investments in state-of-the-art, world scale chemical production facilities in all these countries.
Increased global competition drives the need for greater efficiencies and cost reductions across the industry. While the scale and complexity of bulk chemical manufacturing appears to be increasing; specialty chemicals manufacturers, particularly in Europe, are exploring increased modularization of production assets. This includes development of new modular 'micro' production plants that can be easily located close to either feedstocks or end customers to reduce logistics costs.
In addition to growing pressures to reduce both project-related and operations-related costs and expenditures, chemical manufacturers face increased governmental regulation. This includes mandates to increase safety and reduce potentially harmful emissions. In general, the entire chemical industry is seeing a move toward increased automation to reduce costs and compensate for the growing skills shortage. Increased digitization across the value chain is another clear trend.
ARC Client Quote
"We've found that a lot of the concepts that have been developed by ARC over the years have become foundation concepts for a lot of our planning."