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EPCA 2020: Pandemic accelerates industry trends

October 07/2020

MOSCOW (MRC) -- COVID-19 occurred at an already challenging time for the petrochemical industry and has required it to take some drastic actions, said the leaders of the world’s two biggest chemical companies, BASF and Dow, on Monday at the 54th European Petrochemical Association (EPCA) annual meeting, which is taking place in a virtual format, reported Chemweek.

The pandemic has also accelerated key industry trends, particularly those around sustainability and the environment, they said.

Martin Brudermuller, chairman and chief technology officer at BASF, said that COVID-19 had “intensified” a number of challenges that the petrochemical industry was facing before the crisis. These include the US/China trade conflict; the European Green Deal, which was announced in December 2019 and maps a route to climate neutrality by 2050, and will be linked to a planned EU chemicals strategy; and an “unfortunate supply and demand balance” that had flattened the industry’s cost curves, he said. Together they and the pandemic have created a perfect storm for the industry, Brudermuller said. “The current challenges are the biggest we have ever had in front of us,” he said.

The petrochemical industry is currently “in the spotlight” with governments and the public for being energy intensive, CO2 intensive, and the perceived source of plastic pollution in the oceans, Brudermuller said. Petrochemicals are an enabler for addressing these challenges, but “we struggle to convey” the message that the industry is a solution provider, he said.

Brudemuller identified five action items for petrochemical companies to get their message across: drive operational excellence, install a circular economy internally, transition to low-carbon operations, create transparency, and “do good and talk about it.”

For companies to install a circular economy, “we should be fast in implementation and ahead of regulation,” Brudermuller said. This can help the industry to shape “proper framework conditions that will allow us to succeed,” he said.

The low-carbon transformation “has to be at the top of our agenda, but we as an industry today lack the proper technology,” Brudermuller said. BASF is working in cooperation with various partners on technology initiatives such as producing pyrolysis oil from waste tires and electrification of steam cracker furnaces.

To create transparency around companies’ carbon footprint, “we have to link our efforts into the markets of our end customers,” Brudermuller said. He cited BASF’s decision to calculate a carbon footprint for each of its many products and make the data available to its customers.

It is not enough for the industry to comply with regulations and take part in individual and collective initiatives to address sustainability and climate change. Companies must also communicate this message to counteract an often-negative public perception, Brudermuller said. “As long as alarmism sets the agenda, we need to make the case,” he said. “As an industry, we have something to offer, including innovations and great products. BASF will be an action- and thought leader.”

Jim Fitterling, chairman and CEO of Dow, said that the pandemic is driving petrochemical companies to “rebuild resiliency” and has “forced a retrenchment.” Companies have canceled projects and rationalized capacity in an effort to achieve the lowest possible operating expenses.

“It will force us to be leaner and more focused,” Fitterling said. “The entire industry is defaulting to its strongest and most competitive positions. It is forcing a very quick and strategic pivot.” The winners will be companies that are “best positioned to take advantage of the upswing when it happens,” he said.

The biggest change brought by COVID-19 is an acceleration of two trends that the industry was already tackling -Environmental, Social, and Corporate Governance (ESG) and digitization - Fitterling said. At Dow, ESG “is at the heart of our ambition,” Fitterling said. ([The pandemic) has only strengthened our view that it’s the right strategy. Every stakeholder continues to push for more sustainable products and projects. We intend to move forward and will optimize our assets, and develop and use new technologies,” he said.

Fitterling also expects the pandemic to “unleash an unprecedented amount of collaboration” for the industry with customers, other companies, and other stakeholders. “ESG is a driving force and it is accelerating,” he said. “We can’t ignore what our stakeholders are telling us. The world needs our products, our voices, and our collaboration to get this right.”

Digitization, meanwhile, is becoming a key advantage for companies that implement it in the right way. “The pandemic has made it critical,” Fitterling said. “Data is the new fuel for our industry. It will be a competitive advantage for some companies but a liability for others.”

As MRC informed before, Dow says it will record a charge of between USD500-600 million in the third quarter for costs associated with the company’s ongoing restructuring program, and has outlined more details of its previously announced plan to close manufacturing facilities in the US and Europe to enhance its long-term competitiveness as the worldwide economy recovers from the COVID-19 pandemic.

We remind that Dow Chemical conducted a 45-day scheduled maintenance at its propane dehydrogenation (PDH)unit in Freeport, Texas, from 8 July, 2020. This PDH unit has the capacity of 750,000 mt/y of propylene.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
Author:Margaret Volkova
Tags:Europe, PP, PE, LLDPE, crude and gaz condensate, propylene, ethylene, petrochemistry, BASF, Dow, Russia, USA.
Category:General News
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