Despite the challenges, there are still many opportunities for GCC Chemical

In the GCC member countries, the chemical industry is the second largest manufacturing industry after oil refining in terms of added value.

The chemical industry currently accounts for 3.1% of GCC’s GDP, making it one of the world’s top industries. It is also one of the world’s largest producers of essential chemicals. In fact, the chemical industry is one of the fastest growing industries in the Gulf Cooperation Council, with revenue growth of 17% in 2017, the largest single year growth since 2011.

Specialty chemicals and fertilizers are the driving force of growth

As oil prices continue to fluctuate and the benefits of cheap raw materials continue to diminish, GCC chemical producers have to explore new strategies and opportunities. As a result, they are transitioning to specialty chemicals with higher profit margins and higher added value. China’s middle class continues to expand, and the GCC chemical company is in a favorable geographical position to take advantage of the Asia Pacific market. The growth of global emerging markets and the expansion of the purchasing power of the middle class will also drive the demand for specialty chemicals.

Another growth opportunity lies in fertilizer exports. It is estimated that by 2025, the output of chemical fertilizer will reach 44.8 million tons. Chemical fertilizer will still be a key factor in GCC chemical production, especially when the world pays more attention to ensuring food security and developing regional agricultural innovation.

Digitalization provides an opportunity to win the global market

The global chemical industry is still in its infancy in assessing how digitization can drive significant business benefits, but companies are investing heavily in innovation, and change may come soon. Digitalization provides an opportunity for chemical manufacturers to fundamentally improve their business methods.

Global protectionism is both a threat and an opportunity

Globally, the chemical industry is based on the principle of free trade, taking into account the integrated nature of the global supply chain, and depends on the ability of cross-border free transportation of products. Many global chemical companies have been worried about the recent rise of global protectionism. The more deeply rooted these problems are, the greater the impact on the chemical industry may be.

Let me keep up with the new mobility

The auto industry is accelerating into a new era marked by electric cars, self driving cars and shared mobility. Even if global sales are declining, personal cars will still be used more intensively, with less parking time, more time on the road and more ways to transport people and goods. For chemical companies supplying the automotive industry, the new mobility will mean a huge change in product mix, customers, end users and business models to cope with an expanding, more dynamic and more interconnected industry ecosystem.

The increasing popularity of electric cars, self driving cars and shared cars will affect the quantity, type and quantity of chemicals required by OEM. In the face of these changes, GCC chemical may have to rethink its business model, rethink key markets, and recalculate the value proposition of each product in its product portfolio. In the 26th edition of reaction magazine, we will explore in-depth “motor travel 2030” and how the changing demand patterns of the automotive industry in the next few years will drive fundamental changes in the chemical supply chain.

One of the decisive characteristics of the chemical industry is its dynamism. With all these changes, GCC chemical producers will have plenty of opportunities to find new ways to succeed in the next few years – if they can adapt quickly enough.