Summary

Paul believes the chemical industry is the best leading indicator of the global economy. He says that the chemical industry responds to and facilitates change both up and down the value chains. So, for example, Moore's law of work may continue to work. Partly because of semiconductor improvements, but that was entirely facilitated by very clever specialty chemists producing ever better. Paul believes Photoresists Moore's law would have been impossible without that.

As people came back to work in the new year, you expect to see demand pickup and this year accentuated by the fact that a very, very strong run in the oil price over the new year and into January and indeed olefins and aromatics, you can see take up very strongly. Paul says what stands out there is that polymers didn't. What this enables you to do is put you in the mind of the purchases of those chemicals. polymers purchasers are choosing not to buy them today. In spite of the fact they will expect the price to rise tomorrow because the primary feedstock oil price has gone up that tells you they have little confidence in their downstream demand for their own products.

Paul’s next point is international trade is something they see a lot of data and that gives them strategic insights. For example, they identified a significant build-up of stocker polypropylene within China. Several years ago, simply from the difference between trade data and what they knew was happening on the ground. And that enabled them to warn clients about the potential impact on polypropylene pricing and the financial derivatives based on them. Paul said they have they ears close to the ground and are very close connections with the industry. They pick up a great deal from the various methods they use and get a very strong record in calling major turning points including the beginning of the disaster in 2008. They forecast it before it happened.

Paul then moved on to look at electric vehicles and what they mean for chemicals. Chemicals really is reliant on the auto industry. It's the biggest end use market for chemicals that took over from housing when car sales in China began to take off. The amount of chemicals in a car typically is of the order of 3,500 dollars per unit compares to about 16,000 dollars per unit for a house. Chemicals covers things like coatings on polymers, elastomers, so the rubber parts and engineering polymers the customers in that industry demand and prep specification intensive, but it's a must be industry for several chemical companies. So, for a long time, it's been a great place for chemical companies the way that EVs have been taking off.

Regarding recycling, Paul says process costs and that usually means scale is key and secure access to feedstock is key. As we move towards more demand for sustainability, there will be demand for very specialist types of recycled product for brands like L’Oréal. Chemical feedstock is not yet commercial, but Paul says it will be soon. And this is the technology which will be the main provider for chemicals feedstock in future. This technology will provide reliable, sustainable feedstock for chemicals at scale.

Paul says all this must happen unless the growth of EVs and the penetration of electrification stalls. This must happen on a relatively short timescale and the chemical industry needs to adapt - it's the biggest shift Paul has seen in his 40 years in the industry.

Topics