Global chemicals production growth continues to slow

Ahead of 2016, local chemicals industry body the Chemical and Allied Industries’ Association (CAIA) projected a continued slump in global chemicals production growth rates.

Among the factors that will affect the chemicals industry worldwide are the twenty-first Conference of the Parties held in Paris, France, last year as well as a chemicals industry slowdown, notes the CAIA.

CAIA highlights that production growth is significantly slowing from the peak of 3.7% seen in April 2014 and that September’s reading by the American Chemistry Council indicated a drop to 3% with major regions showing a decline.

Asia’s chemicals production growth rate halved from 6.4% to 3.2%, while Africa dropped from 6.1% to 3.5%. Western Europe fell from 4.1% to 3.2%, with Germany slumping by more than half to 2.1% from 4.7%.

In February 2015, North America peaked at 5.3%; however, it had declined sharply to 2.4% since then.

By contrast, Central and Eastern Europe experienced strong growth at 9.2%, while the Russian rouble’s collapse pushed Russia up to 15%.

The European Union chemicals industry confidence indicator rose slightly in the third quarter of 2015, compared with the previous year. The chemicals order books remained unchanged.

“South Africa remains a developing market and needs to form part of the projected growth as the future growth of the chemicals industry will be driven by developing markets,” states the CAIA, adding that gains from the growth are likely to be between 6% and 10%, compared with the 2% to 3% in developed economies.

CAIA also explains that global chemicals companies have been trying to tap into South Africa’s development, however, most companies find themselves losing to local suppliers for both supply and demand reasons. This includes the issue of accessing resources in South Africa.

Challenges for Chemical Companies
The current environment of uncertain gross domestic produce growth and shifting markets dynamics presents a challenge for chemicals companies, but also offer possible solutions.

According to CAIA, by retooling their business models, focusing on emerging markets and embracing digital transformation, forward-looking companies can position themselves to outperform their rivals and build significant market shares years in advance.

As an organisation, the CAIA, which has 164 members including chemicals manufac- turers, traders and industry service providers.

Some of the members that form part of the CAIA include end-to-end services provider 4PL Group, speciality gas and chemicals products producer Air Products, and maintenance and refurbishment solutions expert Anchor Pail & Drum as well as technology research, development and implementation body the Council for Scientific and Industrial Research.

The association forms part of a worldwide network of chemicals industry associations, and seeks to promote the continuous improvement of performance in the safety, health and environmental arenas, as well as to boost the productivity and competitiveness of the chemicals and allied industries in South Africa, thereby enhancing sustainability.