MARKETS: How Hyperscaling and Data Centers Influence Chemical Demand and Innovation with Jan Kalfus of S&P Global - Ep. 283

Jan Kalfus, Head of Americas Chemical Advisory at S&P Global Energy, joins Victoria Meyer for a fast-paced exploration of how AI and data center growth are reshaping the chemical industry. Starting with Jan’s personal journey, the conversation connects industry fundamentals with today’s high stakes shifts in AI, digital infrastructure, and supply chains. 

They dig into why demand from data centers is spurring real, but nuanced, changes on both the commodity and specialty sides, why much of the action (and opportunity) in specialized materials is still outside the US, and how regulatory constraints and value chain complexity make reshoring tough. The discussion then looks ahead: What does AI really mean for chemical leadership? How are industry roles and university connections evolving as automation advances? 

Victoria and Jan discuss the following: 

• How data center and AI growth is fueling complex, uneven demand for chemicals. 
• The real challenges behind US specialty chemical competitiveness and reshoring. 
• Modernization, regulation, and why many intermediates left North America. 
• R&D, innovation, and the shifting role of universities in the chemical sector. 
• What “agentic AI” could mean for future chemical businesses and leaders. 
• Human context, divergent thinking, and why people still matter for competitive edge. 

Killer Quote: "I always say it kind of to be a little bit provocative, but I think there's a lot of truth behind it, is that the AI will turn out to be the best CEO, the best engineer, the best manager, and the best scientist. It may not be one AI. We may have different agents with different capabilities and different sort of learning profile. But that's where we are going." — Jan Kalfus 

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Victoria King Meyer

Founder & Host of The Chemical Show + The Chemical Summit; Victoria brings 25+ years industry leadership experience including Shell and Clariant and a Victoria brings a practical, business-focused perspective to conversations about leadership, strategy, innovation, and the forces shaping the future of the chemical industry.to

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Victoria Meyer:
Welcome to The Chemical Show, the podcast where chemical means business. I'm your host, Victoria Meyer, bringing you stories and insights from leaders driving innovation and growth across the chemical industry. Each week, we explore key trends, real-world challenges, and the strategies that make an impact. Let's get started. Welcome back to The Chemical Show, where leaders talk business. Today, I am speaking with Jan Kalfus, who is the head of America's Chemical Advisory for S&P Global Energy. Jan and I are going to have a great conversation that starts with data center and AI and somehow ends with AI, and in the middle is all about chemicals. So, Jan, welcome to The Chemical Show.

Jan Kalfus:
Thank you, Victoria. Thank you for having me.

Victoria Meyer:
Excited to have you here. Let's start just with you. What's your origin story? What got you interested and engaged in the chemical industry?

Jan Kalfus:
So, should I go all the way back, all the way back to my childhood?

Victoria Meyer:
Sure.

Jan Kalfus:
I found, yes, so I found, I found a chemistry set in the garage, in my grandma's garage. So that's how it started. But no, seriously, I think that the real origin is about 25 years ago when I started working for a large petrochemical company in Europe called Orlen. And I did my PhD along the way and really explored the world of polymers and chemicals. And what really attracted me was the The big world, the world of big decisions, big investments. And when I say big molecules, I mean molecules with big impact on human society. Ethylene is kind of such a simple molecule, but it's so important, right? Same ammonia and others. So 25 years ago, started working for a big major and then moved to the US, worked for ExxonMobil and later Braskem.

Jan Kalfus:
And when I look back, it's about $20 billion of investment advisory in the Americas and Asia. So quite exciting.

Victoria Meyer:
It's really exciting. And now you're truly advising. So what brought you to S&P Global and what are you doing there?

Jan Kalfus:
Yeah. So S&P Global is, for me, it's really a, it's like a Hubble telescope of the commodity markets, but kind of pointed the other way. We kind of look at Earth from the orbit and look at all the trade and investments and everything that's happening. In my team, what we are doing is, and I know it may sound like cliché, but we try to help companies to understand what's really happening in the world. And either it's through the lens of data and kind of our Hubble telescope, or it's through the boots on the ground. And since I'm in the Americas, we truly have the boots on the ground along the Gulf Coast, up in Alberta, in Canada and also in South America, like Brazil.

Victoria Meyer:
Well, and you're a Texan now, so boots on the ground is real.

Jan Kalfus:
That's true, yeah. I still need to work on my accent though.

Victoria Meyer:
That may never go away, but we can try. Well, I'll check in on you in a couple years and see if it's improving. So Jan, we started just teeing this up talking about AI and data centers, and of course you can't open the newspaper Well, are there newspapers? Yeah, digital newspapers, how's that? Or watch the news or see social media and people are talking about the role of AI, the influence of data center investments, good, bad, and otherwise. And we know it's certainly having an effect on the chemical industry. So when you look at this growth around AI and data centers with a chemical industry lens, what are you seeing?

Jan Kalfus:
Yeah, so first what I see is the impact on the short-term to midterm demand. And I would say the impact is different on the commodity and on the specialty side. On the commodity side, I would say maybe it's a little bit modest. There is certainly a good uplift in demand and it's welcomed by the industry. And by commodity, we mean PVC, polyethylene, maybe it's kind of borderline polyurethane, rigid polyurethane foams. That's the main. So that's certainly a good uplift, but it's not something that would break the fundamentals or, you know, fundamentally transform the market. I would say it's a little bit more transformative on the specialty chemical side, especially when we talk about some of the resins like epoxies, PBT epoxies especially, and some other fluorinated liquids and others.

Jan Kalfus:
So certainly it's a little bit more transformative on that side. So those are kind of the 2 layers when it comes to the Physical market, the tons produced and tons consumed. But I would say the second layer is what AI or data centers really mean for chemicals in the long term. And when we say data centers and AI, it's really the same thing because AI and kind of the growth and hyperscaling, hyperscaling is really how it's essentially a mechanism how to drive AI capabilities and the compute capabilities to really deliver better AI. and move from ChatGPT to agentic AI and really kind of the frontiers of AI. And for hyperscaling, we need materials. So that's what we see and that's what we covered. But I would say in the long term, it's the impact of AI on the chemical industry itself.

Jan Kalfus:
And maybe that's the next step in growth and the transformation of the chemical industry. So I would say in the long term, there are some transformative opportunities, but not necessarily through tons, maybe through intelligence, the industrial intelligence.

Victoria Meyer:
Okay, so let's come around to that later because I have a couple of points on that that I want to understand more from you and a bit of perspective that I've got there. Let's talk maybe focusing in a little bit on this middle layer, the specialty chemicals in use, and we've certainly seen some movement perhaps across different companies in terms of how they're approaching this. The reality is we know that every time we're building something, chemicals are coming into bear. There's a lot of specialty chemicals that get used, whether it's in semiconductors, in the coolants, as you say. I even just think about the innovations that are necessary to help reinforce this speed, this hyperscaling, the build, the capacity that's needed. How is that affecting affecting the chemical industry and how are companies pivoting to adjust to this?

Jan Kalfus:
Yeah, so I think this part of the value chain is maybe a more opportunity for companies outside of the US because although a data center is a large investment, it can be many billions of dollars, but significant part of this direct investment goes into imports. And so we need to import a lot of these specialty chemicals in form of the chips, you know, and some of the components, the hardware, right? It's the hardware that we are importing for a large part. Now, this may change in the midterm as we are pursuing, as a country, we are pursuing large investments, you know, into fab manufacturing, you know, through the CHIPS Act and others. But in the immediate, sort of in the short term, we see quite a lot of imports. And those are specialties like, epoxy resins, some of the sort of glass-reinforced PCB resins or the FR4 fiberglass core substrates with epoxy, some of the fluorinated liquids that are also needed, some of the specialty elastomers and other molecules. So, you know, as the manufacturing for the hardware is mostly outside of US, although it's within G7+ countries, it still may not be an opportunity that's sort of fully leveraged by the, by the US specialty chemical sector. Now that may change.

Victoria Meyer:
Is it accessible to the US specialty chemical sector? I mean, I think about just where the world has evolved from a chemical industry perspective, right? And I certainly know a lot of capacity has moved to China, of course, to, I think India is one of the places, but I mean, are these accessible markets for North American chemical producers?

Jan Kalfus:
Are they feasible? I think in principle, yes, they are, but they would require quite significant investments. And it's not just in one plant or one molecule, but it really needs to be investment in the whole value chain. So it's also availability of the intermediate molecules. And I think you touched on that a little bit. I think there are sort of hidden layers within the value chain for chemicals. And certainly when it comes to some of the epoxies or even specialty chemicals for defense and national security, either it's Kevlar fiber or even some pharma molecules, you know, for example, ibuprofen. Certainly there are some intermediates, and those are mostly aromatic that are, that are being imported from other countries. And we don't really have the infrastructure to make these intermediates.

Jan Kalfus:
Many of them can be chlorinated or halogenated in some way. Those are molecules that require quite serious regulatory process. And as we know, regulatory and regulations have become quite difficult to meet. And we've seen over the years that some of the capacity has moved out of the country because of the regulatory sort of complexity.

Victoria Meyer:
Well, that was going to be one of my questions was, did, were some of those products made here in the US and North America previously, and they've shut down and gone elsewhere? Or is it just that they The innovation started elsewhere and it's continued.

Jan Kalfus:
Yeah, in many cases, that's exactly the story, that we had the intermediate being produced in the US, but there is, there was a safety incident or, or just poor economics that led to the shutdown of the site. And once it's outsourced, it's really hard to bring it back.

Victoria Meyer:
Yeah, it really is. And I think this piece, and we started talking about this before we hit the record button, just this whole aspect of the economics of it, of the economics of the value chain, and really even the ability to bring it back, right? Because I think, you know, one of the things that you were saying, Jan, is that part of the reason some of these products are produced elsewhere is their own tax incentives and government regulations that enable that to be so. Is that right?

Jan Kalfus:
That's true. I think there are probably 2 lenses we can apply. One is exactly that you're mentioning, which is government incentives. And we see that especially in East Asia. You know, especially in China, we have 5-year plan. The government does what the government says they would do, and they just execute on the plan. And so they put incentives where they need a strategic supply for certain commodities or specialties. And there's nothing right or wrong about it.

Jan Kalfus:
It's the country does what the country needs to do to protect its supply chain. Now, the second lens that I would apply is also modernization of technologies and We see some of these technologies actually being operated in so difficult markets like Europe, but they actually have quite advanced chemistries involved. And they are actually on, in terms of cost, they are actually doing quite well and they are quite competitive. So I think it's a combination of both. It's a combination of incentives and maybe strategic approach by the policymakers and by the governments, but it's also deployment of smart chemistries and really the state of the art chemical processes and modernization.

Victoria Meyer:
Yeah. Well, and as I've talked to other people across the industry, you know, one of the things they've commented on is just this idea that as new assets are being built, Asia particularly, maybe in Europe, this leapfrogging of technology, right? So moving into more advanced processing, not trying to retrofit the old, which is what it feels like we're always doing in the US and Europe, but instead, you know, it's also this kind of digital native versus analog native as an analogy, right? The, the new plants that are being built elsewhere are coming in as digital natives with the latest and greatest technologies, whether they are the operating technology or actually the reactive technology and the new technologies that have been developed.

Jan Kalfus:
Yeah, absolutely. And, you know, the other part I think of the equation is, and this is what we see especially in Asia is, especially in China, is really the connection, the growing really close connection between universities and the industry. And we also see many of the programs, the university programs, actually being designed to meet the needs of the industry. You know, me as somebody who's coming from Europe, and I've seen it in Europe, and I see the same pattern in the US, that not always the universities actually create programs and fund research that's meeting the needs of the industry. Sometimes it's more of the cool chemistry rather than actually the applied and the chemistry that we really need in the industry.

Victoria Meyer:
That's interesting. I do think, and I think at one point, I feel like there probably was a tighter university and industry connection that it's kind of evolved over time. And heck, maybe it's a function of who's willing to invest, right? I feel like a lot of chemical companies have cut back on their R&D investments, whether they're in-house or whether they're funding at the university level. That that's an influence in it. If you're not putting your money where your interest is, then it dwindles. But I also think it's interesting. So we've recently gone through, and in fact, as we record this or as we publish this, the Chemical Summit will be taking place. When you're listening to it, it may have passed.

Victoria Meyer:
But one of the things we've implemented this year is we've launched a 40 Under 40 in Chemicals recognition program. There's been a lot of great young leaders in the industry nominated and really a lot of innovators. And what's interesting is those that are really leading very innovative startups, a lot of it hasn't actually— has a university tie or originated maybe in some university research or connections. So I think we're certainly seeing that, that some of the innovation is coming through. But maybe to your point, some of the optimization and the improvements and the connection between industry and university and the industry fundamentals are still missing.

Jan Kalfus:
Yeah, I think that was my point. I think you are right in the sense that there's quite a bit of sort of entrepreneurship and innovation being brought by the younger generation and, you know, the young PhDs or students with master's, and they just have the idea, they work on something in the lab, and then they try to bring it to commercial scale. Although it's, it's a tough life because they need to compete for funding and it's, it's not easy. What I was talking more about is the industry really being more involved with universities and, you know, not to be purely academic, but also be a little bit more sort of industrial. And I can see that sort of close connection Or I could see that before, close connection in China between companies and universities. I could see it in the old Europe where actually we used to have titles like industrial or engineering professor, which essentially was a person who became a professor after 20 or 30 years in the industry and essentially teaching students sort of the industrial chemistry or engineering. And I think we are lacking a little bit of that element today. But what's changing, and maybe bring it back to our data centers, what's changing is also the role of AI that's coming from the data centers and how it's transforming the educational process itself.

Jan Kalfus:
And I think when we talk about a researcher, a scientist, a PhD, I think the meaning is changing with AI because we don't need a PhD to read hundreds of books to acquire the knowledge. we need the PhD to be the guide for the AI. You know, AI is still, after all the improvements, it's still more a sort of convergent thinker rather than divergent thinker. And that's where humans excel, while AI is really the best optimizer. And so maybe we really need that connection, and maybe that's the new role of scientists and PhDs, to define the box for the AI to really excel. and deliver the job that pretty much no human can actually do today, right? The speed of optimization and getting the result quickly, I think that's kind of unmatched in many, many regards.

Victoria Meyer:
Yeah, I think that's a really interesting angle on it in terms of being a divergent thinker versus a convergent thinker. And anybody that's ever used ChatGPT for anything or Claude, he's like, and you're right. And it wants to narrow in, although it sometimes comes up with some crazy things that you're like, I never said that. Where did that come from? But I do think that's an interesting— of course, this is where there's a lot of tension, as you know, around how and where AI is being used. I see this actually. I have a couple of— my kids, my girls are all either recent college graduates or in college or not quite there yet, as are their friends. And there's a lot of conflicting points of view around whether or not they want to use AI, which I think in many ways echoes where we are as an industry. And yet I think, you know, one of the things we talked about is the role of AI today and in the future, and how it's really going to be changing the shape of the chemical business.

Victoria Meyer:
Can you just talk about your experience there?

Jan Kalfus:
Yeah. And before I do that, I would just say that AI, I think that's a real transformation that's happening sort of under our feet. Either we realize it or not, it's something that is going to profoundly change how the chemical industry operates. And it's not the chatbot, it's not sort of the ChatGPT or Claude we have installed, the copilots that are checking our emails. It's the agentic AI. It's the AI that actually can work in a team, a swarm of AI agents. Yeah. That can operate the business.

Jan Kalfus:
And, you know, I always say it kind of to be a little bit provocative, but I think there's a lot of truth behind it, is that the AI will turn out to be the best CEO, the best engineer, the best manager, and the best scientist. It may not be one AI. We may have different agents with different capabilities and different sort of learning profile, but that's where we are going.

Victoria Meyer:
If that's the case, if it's the best, then what's the role of the existing CEO, business leader, engineer, et cetera?

Jan Kalfus:
Yeah, so, you know, it's really hard to say what the endgame is. At least where we are right now, the power is coming from connection between humans and AI. So when I say the best CEO, you know, AI is certainly the best in optimizing the business, optimizing the cash flow. You know, it takes, for humans, it takes many, you know, large meetings on a recurring basis. It's a messy S&OP process and P&L process is sometimes messy and sometimes mistakes are being made. Sometimes we miss things. And I think AI can bring more sort of discipline and accuracy into the process. Also, AI can learn from each other.

Jan Kalfus:
from other AIs. So it kind of bypasses the human element. You can have an AI in Greece, you can have AI in the US, and if they are connected, they are learning from each other in real time, which with humans, it's a little bit more difficult.

Victoria Meyer:
Yeah.

Jan Kalfus:
Right? So there's no silo mentality. There are no— there's no ego, no emotions. But certainly AI needs the human element, especially for the divergent thinking and really seeing what's outside of the box. AI doesn't have emotions, doesn't have passion. It's not visionary. That's where humans excel. And I think they will continue excelling for quite a time.

Victoria Meyer:
I do think it's interesting. I'm not, you know, I think, and I've had a lot of conversations and I've had a few interviews and, you know, various conversations here on the Chemical Show and off. We talk about kind of the importance of AI and how we maximize and optimize it. And it's a couple of different layers. There's the computing layer, which is a little bit what you're talking about. Context is everything though, right? And the context is really coming from humans, from the unique business processes, the unique business point of view, experiences, et cetera. And I think that's something that AI can't teach itself. That's where the The companies, the businesses, the leaders, engineers, what have you, really have to provide that context in terms of what's unique about the way of doing business, about a customer relationship, about a supply relationship.

Victoria Meyer:
Because otherwise, the data is going to give you an answer that may be a data-optimized answer, but it's not really the right one.

Jan Kalfus:
Yeah. So actually, I'm glad you're mentioning it because that kind of brings us back to data centers and the hyperscaling and the You know, the chemical demand. You know, you touched on context. I think there are, there's a couple of dimensions. There are a couple of dimensions that need to be addressed when we talk about AI. It's the context, it's reasoning, it's agency. And I would say it's also, and I think that was the really the initial revolution in AI was the transformer, the attention mechanism.

Victoria Meyer:
Mm-hmm.

Jan Kalfus:
And I think as we are scaling up, and that's what's really behind hyperscaling to bring these, you know, expand the context window. Window, make the reasoning going much deeper, have the agency, the capability of agency, also control the attention mechanism. And that's really what's driving hyperscaling. You know, there has been, there was work that came out of OpenAI team, I think in early 2020s, that really showed the scaling law for neural language models. And that really was kind of behind the realization that hyperscaling is the path to AGI or ASI, you know, the superintelligence. So that's really the path we are on. And that's really what we are trying to build through chemicals and through data centers is these hyperscale, the capacity to, you know, these very, very large neural networks that can actually deliver intelligence that's comparable to humans in many regards. Yeah.

Victoria Meyer:
Is there a corollary? I think about hyperscaling. Is there a corollary to the chemical industry? Is this a scale, bigger is better? Is it something other than that?

Jan Kalfus:
For now, bigger is better for sure. Going forward, I think the battle is shifting more towards efficiency, how to get more intelligence per watt or megawatt or gigawatt of power. That's where cooling comes into play and better cooling means more efficiency.

Victoria Meyer:
Yeah.

Jan Kalfus:
You know, believe it or not, but human brain, which is very powerful, was designed by, you know, millions of years for efficiency. We need about 20 watts of energy to operate our neural network that's in our brains. You know, a data center needs, you know, megawatts of energy. Right, to achieve the same or similar outcome, you know, in terms of sort of the crude computational power. Now, human brain and data center, they work in different way. You know, human brain is a low frequency, it can multitask, while, you know, AI and data center is more about speed. You know, it kind of can achieve similar outcome, but through different means.

Victoria Meyer:
Mm-hmm.

Jan Kalfus:
It cannot really multitask. It still struggles with memory. And, you know, there are still some differences. But going back to Hyperscaling, you know, that's for now scale and bigger is better. And that's what's driving a lot of the chemical demand, chemical demand, especially in PVC, polyethylene, some of the elastomers, polyurethanes, rigid polyurethane foams. They are a big deal. Sealants for all the buildings. So it's the construction and it's the hardware.

Jan Kalfus:
Those are the 2 main contributors to the demand growth that we see today.

Victoria Meyer:
Yeah. And that is a good way to bring it all back to the beginning. So, Jan, this has been a great conversation. I think it's just, and you bring an interesting perspective in terms of the role of data centers, the influence of some of these hidden chemicals and where they're being made and how that may or may not change. And then of course, the role of AI. And we didn't even get into your agent. So we might have to do a follow-up at some point talking about the agents that you're building that are, I guess, going to kick you out of your job at some point, perhaps, Jan? Is that, is that the goal?

Jan Kalfus:
Oh, I don't know. I hope not. I love my job. I love my job. But, but no, thank you, Victoria. Thank you for having me. You know, we live interesting times. We live transformational times.

Jan Kalfus:
And so it's kind of exciting, but it's a little bit chilling too. And let's see what the future brings.

Victoria Meyer:
Absolutely. Well, thank you for joining me today. And thank you everyone for listening. Keep listening, keep following, keep sharing, and we will talk with you again soon. Thanks for joining us today on The Chemical Show. If you enjoyed this episode, be sure to subscribe, leave a review, and most importantly, share it with your friends and colleagues. For more insights, visit thechemicalshow.com and connect with us on LinkedIn. You can find me at Victoria King-Meyer on LinkedIn, and you can also find us at The Chemical Show Podcast. Join us next time for more conversations and strategies shaping the future of the industry. We'll see you soon.