2019 COVID-19 Impact on Chemical Companies

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In view of the core position of the chemical industry in the global economy, the industry has fully felt the impact of 2019 coronavirus disease, although some industries have been more affected than others. We analyzed who is the winner and who is the loser at present, and focused on the steps that all chemical companies need to take now to seize future opportunities – rethinking their goals, commitments and portfolios to drive future growth, value creation and adaptability.

Never before in human history have so many regions shut down most of their economies in close sync. As an important part of each economy, chemicals and materials exist in daily life products, which exposes the sector to this broader market stagnation.

This paper will explore how the industry responded to the new coronavirus crisis at the beginning, focus on the eye-catching actions taken by individual participants, and analyze the potential direction of the industry in the future. We firmly believe that in addition to the problems brought about by the crisis, the crisis also provides an excellent opportunity for the chemical and materials industries to accelerate the pace of transformation, and once again be seen as a key solution delivery industry, benefiting all of us.

Impact of 2019 coronavirus disease on chemical industry

Market impact

The global stock market is actually a machine that digests complex information and outlines its impact on enterprises and industries. Therefore, examining its conclusions from the perspective of stock price fluctuation can provide interesting insights on how different industries respond to or expect to respond to the crisis. Our analysis is based on a six-month time frame, including the three months before the crisis (the baseline before the crisis) and the first three months of the crisis itself (providing a complete time span to show the resilience of different industries, sectors and participants).

Impact of operation

Like other companies, chemical companies are adjusting their core business in three different ways:

Accelerating digital efforts: social distance rules make it mandatory – Companies in many departments are suddenly forced to switch to collaborative virtual work environments. This is relatively easy to achieve for office / management staff, although the real “light out” manufacturing is not in place yet, chemical companies have achieved highly automated production in the past decade. More difficult are activities that historically relied on geographic distance: meeting new people, exchanging ideas, and of course advocacy, persuasion, and negotiation. These are important components of business and R & D / innovation functions – unless travel restrictions are lifted soon, companies will need to find solutions that are more than just video calls.

Adjust the production line: the need of the crisis has led many chemical enterprises to adjust to meet the sudden huge demand for a variety of disposable medical supplies and protective equipment. Manufacturers such as 3M and Braskem have speeded up production of existing core products overnight to supply masks and protective equipment materials, and work that usually takes months to complete can be done in weeks. Other companies are converting their existing production lines to products outside the traditional product line. Many companies, such as arcoma, chihuadun and Henkel, are turning to hand sanitizers, while others, such as DSM and Auping, the Dutch mattress maker, are joining in the production of masks. However, not all of these initiatives are expected to have a long-term strategic impact.

Another class of potentially more durable solutions has emerged, involving many 3D printing initiatives, mainly for the production of PPE materials. Solvay, HP and STRATASYS are good examples, and many distributed DIY manufacturers have seized the opportunity.

Reducing supply chain risk: reminiscent of the Fukushima disaster in 2011, the cowid-19 crisis has made many people worry about major disruptions in the global supply chain. The surge in demand, such as nonwovens for masks, caused temporary unrest, with relatively small overall impact. But many business leaders believe that a pattern has emerged in the wake of the recent threat of a trade war. They see the pandemic as a further warning signal not to rely too much on remote, centralized, and potentially volatile supply chains.