Opportunities driving us specialty chemicals market

Opportunities driving US speciality chemicals market

10:57 AM, 12th April 2018
Opportunities driving us specialty chemicals market
Jennifer Abril, President & CEO, Society Of Chemical Manufacturers & Affiliates.

In a dialogue, Jennifer Abril, President & CEO, Society Of Chemical Manufacturers & Affiliates (SOCMA), with Chemical Today magazine gives an insight into the expectations, realities and opportunities that lies ahead for the speciality chemicals industry of the US.

By Shivani Mody

The US and global markets have been and continue to be strong for the speciality and fine chemicals industry. For Society Of Chemical Manufacturers & Affiliates (SOCMA) member companies, which primarily sell into the performance, agricultural and pharmaceutical chemical sectors, 2017 was a banner year. Various sources pegged the year at a 4 percent growth rate. Anecdotally, numerous members have told us that last year was their best to date, and expectations remain high for 2018. As we near the end of the first quarter of 2018, below are a few perspectives on opportunities and challenges for the speciality chemical industry.

Innovation and Other Factors Driving a Strong Market for Specialties

Speciality chemical manufacturers by nature are extremely innovative and entrepreneurial, and research and development of new chemistries continue to be a key component of their businesses. In addition to the resurgence of key market segments strongly dependent on speciality chemicals and new project starts, other important factors are fueling this compelling growth, including the low price of natural gas.

Distribution channels for US manufacturers remain solid, and the regulatory environment is improving under the new Administration. Because of a more business-friendly environment, many SOCMA members and others in the industry are telling us that projects they have had in the pipeline for many years are now coming to fruition.

The impact of shale gas on the US economy also has been significant and is continuing to increase. Closer to home, one of the most significant new projects currently being built by Shell Chemicals is the $6 billion ethane cracker plant near Pittsburgh, PA. With these infrastructure improvements and a wider supply of feedstocks, companies are poised to expand their domestic advantage and increase their outputs.

Finally, mergers and acquisitions continue to shape the evolving chemical industry, with direct effects on speciality chemical providers. For example, mega-mergers such as Bayer and Monsanto and Dow- Dupont will present new opportunities for SOCMA members who touch their sectors.

US Regulatory Landscape Improving Under New Administration

Federal agencies have new directives aimed at eliminating burdensome and unnecessary regulations that impede businesses from succeeding. Under the Trump Administration, we are seeing agencies that govern the chemical industry, including the US Environmental Protection Agency (EPA), striving to be more transparent and working with industry to understand how various requirements impact the regulated community and whether there would be implications for the industry’s ability to remain competitive. According to the White House, the landscape is already improving. They report that, to date, agencies have collectively eliminated an average of 22 regulations for every new regulation that has been brought to the table.

Nonetheless, challenges remain with implementation of the new iteration of the US chemical safety law, the Toxic Substances Control Act (TSCA). There were significant delays in approvals for new chemicals throughout 2017, and issues remain in the early stages of 2018. We, at SOCMA, know it is critical that EPA keep pace with the market. We are advocating for more timely reviews and more focused decision-making at the agency because we know these delays are having a direct impact on our members’ ability to deliver products to market.

More Opportunities for Trade with the Asia Pacific

Trade is at the very heart of why SOCMA has founded almost 100 years ago, and our speciality and fine chemical makers are key players in the global market. Recognizing the importance of Asia Pacific as a primary hub of raw materials supply, SOCMA has an interest in ensuring the industry has access to this important market. We feel that ample opportunities remain for increased cooperation in the Asia-Pacific rim. Yet we are particularly concerned about the potential for the U.S. to pull out of the existing free trade agreement (FTA) with Korea. KORUS, as it is known, is broadly viewed by the chemical industry as a favourable framework. Short of KORUS, the only FTA in the region would be with Singapore.

For these reasons, we are pleased to hear that President Trump is open to reconsidering the Trans-Pacific Partnership (TPP), and we would like to see even more efforts to foster multilateral, regional and bilateral agreements with key regional players like Korea, Taiwan, Indonesia, Thailand and China.

Finally, it goes without saying that the North American Free Trade Agreement (NAFTA) is also extremely important to our speciality chemical manufacturers. Since NAFTA was ratified, the trade of chemicals between NAFTA countries has more than tripled, from $20 billion in 1994 to $63 billion in 2014. While we would like to see some provisions of the agreement updated, it is vitally important that re-negotiation efforts do not harm the fruitful existing trading relationship between the US, Mexico and Canada. For this reason, SOCMA is closely monitoring developments at both the political and working level.

Specialty Chemical Manufacturers a Model for Product Stewardship

Research & development is the life-blood of the speciality and fine chemical industry. With R&D spending often estimated at 10 percent or more, our industry is a working model for innovation and product stewardship. As an example, SOCMA is monitoring developing trends such as upstream bio-markets for raw materials, downstream growth in sustainable products, and the potential for increased uses of flow chemistry by the speciality sector, among others.

Also, core to this industry is a fundamental commitment to safety. SOCMA members are constantly looking for ways to improve the well-being of their workers, local communities and the environment at large. For decades, companies that manufacture chemicals have voluntarily committed to a continuous performance improvement program for environmental, health and safety aspects of their operations. This program builds customer confidence, community trust and strengthens product stewardship throughout the chemical supply chain.

Given these principles, when it comes to finding new business partners and raw material providers both within the US and in other markets, speciality and fine chemical manufacturers have high expectations. Companies are looking for suppliers that can reliably provide quality materials that will meet the regulatory guidelines by which they are governed. Just as important is the need to meet the expected delivery timelines to satisfy strong and growing customer demands.

Challenges Facing the Specialty Chemical Sector

The second half of 2017 brought a unique challenge for our industry. With three separate hurricanes hitting the southeastern US within weeks of each other, the industry at-large was reminded of the intricacies of the chemicals supply chain. When facilities in Texas, Louisiana, Florida, Georgia and the Carolinas faced flooding and other damage, disruptions ensued while facilities looked for alternative materials suppliers. Fortunately, most affected facilities quickly rebounded from these natural disasters, but the storms revealed the need for diversification as our industry continues to grow and expand.

These projections for continued demand mean that companies must have access to a qualified workforce. In-house training tools like SOCMA’s Chemical Operator Training Manual can help as companies onboard new employees. And in some instances, local community colleges are developing programs targeted to these needs. Yet the manufacturing industry, as a whole, is gravely concerned about finding future workers to staff their facilities. That’s why SOCMA supports efforts with other manufacturing-based organizations to promote the viability of a career in the chemical industry.

© Chemical Today Magazine

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