The unstable landscape the chemicals industry is facing–a result of a funk since its peak in 2007–is indicative of a new normal. In 2016, overall industry sales growth increased just 2.1% as the sector faced declining industrial production and broad inventory rightsizing by many of its customers. Chemicals companies that sell petroleum-based products often fell short of these industry averages since lower oil prices led to sharp top-line declines, sometimes in the range of 30-40%. The only winners–naphtha-based producers who saw materials cost reductions of about 60% due to oil price weakness.
Chemicals executives are now facing a significantly altered industry that is marked by hyper-competition for growth in global markets that each have their own significant shortcomings, and that offer little support for change. In this environment, a zero-sum game is all that exists.
Bottom line, the race is on to gain market share. PwC’s Strategy& offers three strategic activities to help chemical companies emerge on top:
- Capture value over volume
- Adopt next-generation digitization
- Seek portfolio coherence
In our 2017 Chemicals Industry Trends, we dive into these three activities to help chemicals companies open doors to profitable growth. The time to act is now–in today’s unsettled conditions, a delay by one is an opportunity for another.
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