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Chemical supply chains unprepared for global megatrends
Updated: 2012-06-25 09:06 Source: PUWORLD独家发布 share:

ICIS——A major proportion of the supply chains in the chemical industry are not yet fully prepared for the important emerging megatrends of raw material scarcity, rising energy costs and demographic change.

According to a joint readership survey by ICIS and J&M Management Consulting, only 11% of the survey's 958 respondents currently consider far-ranging global developments for the operation and design of their supply chains. The online survey (see panel) was augmented by 10 face-to-face interviews with CEOs/CFOs of chemical industry companies, carried out by J&M.

Since 2008, the chemical industry has had to cope with heightened uncertainty, increased volatility and faster economic cycles. As one CEO succinctly puts it: "This is the new normal - this will stay just as it is for the next several years."

Chemical demand plummeted in 2008 and 2009 because of panic order cuts from end-user customers. Capacity was massively shut down, thus laying the foundation for shortages during the years ahead.

The strong performance enjoyed by the chemical sector through 2010 and most of 2011 - as demand held up, stocks were rebuilt and prices remained firm on constrained supply - evaporated toward the end of 2011, as demand softened, and most noticeably in China, while market confidence waned.

As one CEO noted in the interviews: "If we had known in 2008-2009 how long this downturn was going to last, and had been realistic, we would have addressed some of the fundamental cost issues in a totally different way. We also wouldn't have taken our foot off the cost containment pedal at all when things turned up slightly. Human nature was to emotionally look for the old status quo and comfort levels."

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Since 2008, the chemical industry has had to cope with heightened uncertainty, increased volatility and faster economic cycles. As one CEO succinctly puts it: "This is the new normal - this will stay just as it is for the next several years."

Chemical demand plummeted in 2008 and 2009 because of panic order cuts from end-user customers. Capacity was massively shut down, thus laying the foundation for shortages during the years ahead.

The strong performance enjoyed by the chemical sector through 2010 and most of 2011 - as demand held up, stocks were rebuilt and prices remained firm on constrained supply - evaporated toward the end of 2011, as demand softened, and most noticeably in China, while market confidence waned.

As one CEO noted in the interviews: "If we had known in 2008-2009 how long this downturn was going to last, and had been realistic, we would have addressed some of the fundamental cost issues in a totally different way. We also wouldn't have taken our foot off the cost containment pedal at all when things turned up slightly. Human nature was to emotionally look for the old status quo and comfort levels."

 

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