SPECIALITY CHEMICALS FIRMS ORDER RISE AMID COVID-19 PANDEMIC

 “Specialty chemical manufacturers faced logistics and labour issues when a nationwide lockdown to control the novel coronavirus outbreak froze supply chains. However, one industry is expected to recover more quickly than others. This is due to the fact that the industry continues to function, but at a reduced capacity, as a supplier of chemicals to critical industries such as pharmaceuticals, personal health, and hygiene.”

Since the sector is reliant on exports, analysts and company executives expect output to improve. Furthermore, China's production in this segment is expected to decline, opening up more opportunities for domestic specialty chemical producers. The expected rise in importers looking for an alternative supply chain, particularly in the context of the coronavirus outbreak, is a trigger for specialty chemical players. In this vein, Japan has set aside $2.2 billion to assist its producers in shifting production away from China. Frequent supply disruptions in China (which began with environmental concerns and was later led by Covid 19) and MNCs' excessive reliance on Chinese supplies have already resulted in a number of early innovations in manufacturing shifting to India.

THE OIL, GAS, AND CHEMICAL industries experienced an unexpected turning point in the first quarter of 2020. The combined effects of the COVID-19-related economic downturn and the oil price crash reverberated across these sectors, which were already dealing with difficult long-term trends. The events of early 2020 compounded three of these patterns in particular:

  • Growing customer understanding of environmental issues has prompted energy and chemical companies to look into decarbonization technologies, reassess their properties, and diversify away from hydrocarbons where possible.
  • Workplace adoption of emerging technology is changing work and the workforce.
  • In certain market segments, chemical companies have been experiencing oversupply.

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Trends are accelerating.

A subset of interviewed chemicals CEOs, division executives, and R&D leaders expressed a simple strategy: The majority of financially strong businesses plan to increase their investment in some projects that they see as accelerating and that will improve their competitive position in the future. Since these strategies are linked to structural developments that are expected to accelerate both brands and governments, this approach is likely to yield competitive advantages in the future.

  • Remote or digital sales platforms are preferred: Due to social distancing and constraints, more B2B and B2C interactions are taking place across remote or interactive networks and experiences.
  • Focus on health and safety: Consumers are demanding that brands and policymakers take safety and precautionary steps.
  • Pop-up ecosystems are forming: Value chain disruption is likely to lead to more innovative collaborations.
  • Investments in development and the circular economy: Since the outbreak of the pandemic, environmental, social, and governance investments have seen a steady rise in inflows and higher-than-average returns.
  • Biocidal and usable materials are in high demand: The COVID-19 pandemic has given biocidal paints, coatings, and surfaces a new lease on life in public spaces including hospitals and schools.
  • Visualisation of the workforce: Organizations have already adapted to operating remotely and have started to implement new business models as a result of workforce virtualization.
  • Digitalization of key business processes: As a result of social distancing, more people are adopting contactless technology and digital interactions (e.g., advanced analytics, 5G).

Major Market Highlights:

  • Aarti Industries in India accounts for 75% of the global market and is ranked in the range of first to the fourth position covering a market share of 25-40% respectively. Ranked third in chlorination, fourth in nitration and second in Ammonolysis and hydrogenation.
  • Axalta, a leading global supplier of liquid and powder coatings, reported in November 2020 that it had completed the acquisition of Capital Paints LLC, a thermosetting powder coatings manufacturer based in the United Arab Emirates.
  • PPG acquired Dexmet Corporation, a manufacturer of specialty materials for surfaces in aerospace, automotive, and industrial applications.
  • ArrMaz, a world pioneer in specialty surfactants for crop nutrition, mining, and infrastructure markets, was acquired by Arkema.
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