Distribution continues to outperform
The chemical distribution industry is optimistic , despite ongoing challenges . Andrew Warmington reports from the FECC Annual Congress
Winkler – Ask what value you can create
Despite this time of unprecedented challenges , the mood at FECC ’ s annual congress at Sitges , near Barcelona , in early September , was upbeat . If there was a common consensus among speakers , it was that distributors are uniquely positioned to take advantage of the ongoing trends shaping the market . “ There are many reasons why we can really be positive about the situation ,” said Lars Wallstein , managing director of IMCD Germany and FECC vice-president , in opening the first session . “ The last three years have not been easy and yet this industry is considered essential .” “ It is one tiny little piece missing from the value chain that we were able to fix in many cases . We have the market success , the market intelligence , a service mindset and the agility to fix problems . That ’ s why challenges can also be opportunities . We can match supply and demand in a very proactive way .” From the perspective of investors , chemicals have outperformed the world market and emerged from the current crisis , noted Georg Winkler , senior partner at McKinsey . And the $ 30 billion / year global chemical distribution sector has outperformed the chemicals industry as a whole for the last 20 years and in particular during the COVID pandemic .
Five key trends
Winkler identified four trends that are currently shaping chemical distribution , starting with sustainability , which he regarded as “ the single biggest issue we are facing at the moment ”. The EU is at the forefront of regulation in this respect and this , together with consumer reactions , has led to changes in the industry . The key targets are reaching carbon neutrality by 2050 and a 55 % reduction by 2030 . The Chemicals Strategy for Sustainability also envisages a toxic-free environment by 2050 . Moreover , across many industries , top 20-30 players are setting ambitious emission reduction targets under consumer pressure . “ This will inevitably translate into the chemical value chain ,” Winkler said . The industries making these targets know they cannot achieve them without their suppliers . They will put pressure on those suppliers to come up with carbon-neutral options and change suppliers if they cannot do so . For 15 years , the chemical industry has been decarbonising its assets or building new ones to create low-carbon products . Because this massive process will take a long time , demand for sustainable materials is outstripping supply and this is creating price differentials ; recycled PET , for example , is currently selling for four times more than virgin material . The second trend , volatility , arguably moved into the forefront ahead of sustainability this year . By this , Winkler meant all the current geopolitical tensions , those resulting from COVID , shortages of raw materials and shipping , as well as high inflation . Some raw materials have increased in price by up to 300 %. That volatility is reflected in the mood of the industry . In a recent McKinsey survey , chemical industry respondents cited their top two
48 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981