2020 was a turbulent year for most industries, and the chemical industry was no different. Last year, the US chemical industry faced an unlikely combination of challenges: pandemic, polar storms, protectionist trade policies, and a global slowdown of consumer demand. All sectors were affected. However, in 2021, reports and trends suggest that the US chemical industry is well into its journey towards recovery. Demands have started picking up again, and certain sectors like pharma, plastics, PPE manufacturers, etc., have even seen a boost in their growth.
The Path to Recovery
In the first half of 2020, the chemical manufacturers in the US faced the heat from a deep decline in demand as the coronavirus pandemic broke out. In addition, the lockdowns declared by various governments around the world also resulted in a massive decline in manufacturing and unseen bottlenecks in the global supply chain.
However, experts note that the demand for chemicals started to be discovered later that year, as business activities worldwide and in the country slowly began opening up again. There was a recovery in the construction and automotive sectors. The demand for new vehicles started picking up again, thereby facilitating the recovery of related chemical sectors. Projects that were paused due to supply chain disruptions have been restarted following the loosening of restrictions. This has enhanced the recovery of cement, steel, and related chemical industries.
The pandemic lockdown hit almost all sectors hard, but the demand for petrochemicals, especially ethylene, did not see a significant decline. Experts say this sustained demand for ethylene stems from its applicability in a wide range of essentials during crises, like polyethylene plastic wraps and ethylene oxide in detergents.
The global recovery has helped with the recovery of the US chemical industry by providing an increase in demands for local materials and products again. For instance, the pandemic has acted as an opportunity for producers who focus on raw materials for personal protective equipment and other medical products. The increased focus on vaccine production has also helped the pharmaceutical industry in the country to be more competitive and productive.
What next for the Industry
Now that the worst is said to be over, industries can begin to focus on effective recovery along with corrective measures. The pandemic exposed the deep-rooted vulnerabilities of supply chains, which is a good place to start post-pandemic long-term strategic initiatives. Chemical companies must develop more disaster-resilient supply chains using recent advancements in computing and digital technologies. For example, machine learning can be deployed to predict disaster risks and suggest alternate supply chain routes.
Industries should also focus on improving the operational efficiency, asset, resource optimization, and cost management of manufacturing processes. Environmental sustainability is another area that requires immediate attention. Chemical importers and manufacturers should analyze the processes and integrate more environmentally benign raw materials and processes to ensure that the community and the environment isn’t harmed.
The pandemic has changed socio-political, economic, and environmental expectations from industries. Chemical companies in the US should start implementing targeted and strategic initiatives across major functional areas like R&D, supply chains, sustainability, and technology. Investing in innovation and emerging technology will help the chemical industry to recover from the pandemic with more productivity, resource efficiency, and resilience.