The chemical industry’s response to a crisis while in crisis
By Dean Curtis, President and CEO of ICIS
We often forget how vital the chemical industry is to our well-being, safety and daily lives. The stigma around the issue of plastics waste in the environment often overshadows the progress the industry has made in becoming one of the more sustainable producers of critical products, many of which are based on oil and gas.
In recent months, it has never been clearer just how important and responsive this industry is when faced with a global health crisis. The world has been left reeling from the impact of coronavirus and the chemical industry has stepped in with incredible speed and agility to help struggling health authorities get the materials they need to help fight the virus – protecting our people on the front line to save lives.
Life-critical materials from chemical suppliers are required to produce antibacterial wipes, hand sanitizer, disinfectants, surfactants for soaps and personal protective equipment (PPE) such as masks, gowns and face shields. By supporting a robust supply of such products, the chemical industry is helping control the spread of the virus.
Alongside a huge swing of production towards isopropyl alcohol (IPA) and ethanol, used in the production of hand sanitizer, many chemical companies have acted to directly meet the massive spike in demand for the final hand sanitizer product.
INEOS built two new plants in the UK and Germany in just 10 days to produce hand sanitizer, which it is now distributing free to health authorities. Two more such plants were built in the Arkansas and Pennsylvania in the US, in under 10 days. INEOS sites in Grangemouth, Scotland and Moers and Herne in Germany and Lavéra in southern France have also been running at capacity to produce the IPA and ethanol needed to support the new plants.
Dow has announced four additional global sites for sanitizer production which, including its existing facility in Germany, takes expected production to more than 200 metric tons. Again, the sanitizer will be free of charge to health authorities. Dow has also designed simplified and lightweight face shields, and is producing 100,000 such units for donation to hospitals in Michigan, US.
There are many examples where our industry, like humankind, has come together, stepped up and pivoted to support our fight against Covid-19.
The industry has, and will, play a significant role in this crisis, its prevention and the recovery. ExxonMobil, Oleon, MOL, Shell, Cropenergies, Huntsman, LyondellBasell, BASF, Arkema, Perstorp, Indorama, PTT Global Chemical, SABIC, Unica, VCI and many others, have all responded in a huge global effort to support the fight against the virus.
The response from the chemical industry to this global crisis is not surprising. The industry has long stood as a major contributor to global GDP and a game changer in human history.
Innovation continues to evolve to improve and save lives, and enable critical technologies. Chemicals have helped deliver low and zero fat foods; make water safe; create new materials that are stronger, lighter and safer for electric vehicles; enabled more efficient aircraft and increased crop yields.
Indeed, almost every industry relies on chemicals for some part of its production processes. Its work today has focused on supporting growth and addressing sustainability challenges.
On 19 March, the US Department of Homeland Security (DHS) identified the chemical industry and its workers as “Essential Critical Infrastructure” – an industry sector critical to public health and safety, economic and national security. The DHS noted to the chemical industry that there is “a special responsibility to maintain your work schedule”, while following CDC (Centers for Disease Control and Prevention) workforce and customer protection guidance.
As the industry continues to pivot its production capacity in response to Covid-19, it is doing so in a market landscape in which chemical prices due to the virus have plummeted.
The ICIS Petrochemical Index (IPEX) in April plunged 18% from March, and 37% year on year on a global basis. The second quarter is expected to be the worst in terms of financial performance for the industry as demand collapsed amid the lockdowns.
Alongside cleaning and sanitizing products, polyethylene (PE) for food packaging and polypropylene (PP) for PPE are crucial in disease prevention. Although critical to the Covid-19 response, demand and pricing for these materials have also slumped on weakness in automotive, construction and consumer durables.
For an industry born out of innovation and pivotal to modern society, however, the chemical industry will remain strong. The effects of the Coronavirus pandemic will certainly echo through many industries and their supply chains, providing an opportunity to learn and most likely change the way they work in the future.
Under the pressures which a crisis brings, organisations will have to find better and new ways of doing old things, summoning creativity to adapt to a new normal with the conditions and opportunities this brings.
For an industry that is already turning to digitalisation and analytics to help it become more efficient and robust, its resilience, purpose and agility have been demonstrated with its response to the world today and will help protect its future.
About Dean Curtis
Dean Curtis is President and CEO of Independent Commodity Intelligence Services (ICIS). ICIS is part of RELX, a FTSE 20 company with revenues of $10 billion and an employee base of over 30,000 experts across 40 countries.