The COVID-19 pandemic has had an unprecedented impact on many businesses, including the petrochemicals industry, which was already facing cyclical challenges such as overcapacity, pricing pressures, and trade uncertainty, said a recent Deloitte report.
Despite the economic headwinds, the petrochemicals industry has continued to raise its game to meet rapidly-changing customer needs.
As we move into the second quarter of 2021, the transformed economic, social and environmental landscape will play an even greater role in shaping our collective future.
For global petrochemicals company SABIC, lowering its carbon footprint and working towards a circular economy has consistently been at the forefront of its business strategy, even as challenges resulting from the pandemic continue to evolve.
Asia, an engine for future growth
While the pandemic is anticipated to continue to impact consumers and influence the global petrochemicals marketplace in the short- to medium term, SABIC is optimistic that the Asia-Pacific region can help spur the chemical industry's recovery.
This is in part boosted by the strength of the Chinese economy, the growing population within the Association of Southeast Asian Nations (ASEAN), the under supply in India and the recent signing of the Regional Comprehensive Economic Partnership (RCEP) agreement - a free trade pact gathering 15 regional economies including China, Japan, Australia, South Korea and Singapore.
Janardhanan Remanujalu, Vice President and Regional Head, SABIC South Asia & ANZ, noted that while ASEAN is in a hydrocarbon deficit, the region has developed to become one of the world's largest petrochemicals manufacturing hubs.
SABIC's core businesses - including petrochemicals, agri-nutrients and specialties - are well positioned in the region, providing customers with proximity and access to high-value products.
Ramanujalu sees opportunities for long-term growth in industries such as automotive, consumer goods, packaging, agriculture, healthcare, personal care and construction solutions.
And while global supply for petrochemicals still exceeds demand, he is confident in the resilience and strength of SABIC's operations and supply chain in meeting the evolving needs of customers and in supporting the resilience and recovery of the region's economies.
Strengthening a circular economy
While the petrochemicals sector has played an instrumental role in supplying the medical frontlines and safeguarding communities this past year, there is the corresponding pressure from consumers to address sustainability concerns amidst the increasing amounts of plastic waste generated.
While lower oil prices and higher concerns over health and safety during a pandemic may presumably slow down the transition to a circular economy and keep recycling rates low, a recent McKinsey survey found that 87 per cent of recyclers expect consumers to remain supportive of sustainable or recycled products, regardless of the crisis.
In addition, the pandemic has triggered changes in consumer behavior in becoming more environmentally conscious.
A recent Accenture COVID-19 Consumer Pulse Research found that 62 per cent of consumers had heightened their focus on the environment, influencing their purchasing choices during the ongoing pandemic.
Now more than ever, both the private and public sectors need to join hands with consumers in stepping up and driving impactful sustainability innovations and solutions that help address pressing environmental issues globally.
As an essentials industry, the petrochemicals sector underpins numerous industries and supplies critical goods. Correspondingly, it has a crucial role to play in leading positive, long-term benefits to the environment, the economy and society as a whole through its operations, business and commitments.
Finding new ways to champion sustainability
At the same time, SABIC will continue to build a "circular economy" to achieve its vision to create an ecosystem where plastics are reused and remade into new products.
The outbreak of COVID-19 has resulted in the increased use of plastics, particularly in the healthcare and food packaging industries. Greater efforts are now required on the part of stakeholders to ensure most plastics can be recycled and reused to eliminate waste.
Some examples of these innovative solutions and collaborations include SABIC's TRUCIRCLETM portfolio of products and services, which comprise various innovations in the circular space that were first launched in Europe, and have since expanded to other geographies including Asia.
Working closely with its customers, the application of its certified circular products made using difficult to recycle mixed used plastic have gone beyond food and packaging, expanding into new consumer segments and markets such as personal hygiene and cosmetics.
Engaging proactively with industry partners, non-governmental organisations, governments and communities to dialogue, exchange best practices and implement shared commitments are also vital in addressing global challenges holistically.
For instance, SABIC collaborated with Spanish energy leader Iberdrola to transform its polycarbonate facility in Cartagena, Spain, into the world's first large-scale chemical production plant to run entirely on renewable solar power.
In addition to investments and collaborations, petrochemicals companies also need to join hands with relevant industry bodies and peers to create stronger, collective impact and enable genuine, positive change.
As part of its commitment in closing the loop for plastics, SABIC is a founding member of the World Plastics Council and the Alliance to End Plastic Waste (AEPW) and a partner of The Ocean Clean-Up.
Together with AEPW and other industry peers, SABIC is working on four strategic pillars - infrastructure, innovation, education and engagement, and clean up - to help further the sustainability agenda.
Staying the course, despite economic headwinds
While COVID-19 continues to present a highly challenging business environment, sustainability is no longer an option for the petrochemicals sector but a commitment that needs to be embedded into an organization's strategy, business and ways of working.
"We can no longer return to a pre-COVID status quo. The "new normal" demands that we, as an industry, step up and innovate for a future that supports the health and sustainability of our people, business, planet," said Ramanujalu.
Look out for the last instalment of this series which will focus on how the chemicals industry is helping to future proof local economies in the key area of carbon capture, agri-nutrients and sustainable urbanization.