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Welcome to The Chemical Show™, where chemicals mean business. Featuring interviews with industry executives, you’ll hear about the key trends impacting chemicals and plastics today: growth, sustainability, innovation, business transformation, digitalization, supply chain, talent, strategic marketing, customer experience and much more.
Episodes are published every Tuesday.
Hosted by industry veteran Victoria Meyer, The Chemical Show brings you the latest insights into the industry. You will hear from leading industry executives as they discuss their companies, business, markets, and leadership. You’ll learn how chemical, specialty chemical, petrochemical, material science and plastics companies are making an impact, responding to the changing business environment, and discussing best practices and approaches you can apply in your business.
A key component of the modern
world economy, the chemical
industry delivers products and
innovations to enhance everyday life.
It is also an industry in transformation
where chemical executives and workers
are delivering growth and industry
changing advancements while responding
to pressures from investors, regulators,
and public opinion, discover how
leading companies are approaching these
challenges here on the chemical show.
Join Victoria Meyer, president
of Progressio Global and
host of the chemical show.
As she speaks with executives across the
industry and learns how they are leading
their companies to grow, transform, and
push industry boundaries on all frontiers.
Here's your host, Victoria Meyer.
Victoria: Hi, this is Victoria Meyer.
Welcome back to The Chemical Show.
So in today's episode, it's
a bit of a unique episode.
I recorded most of it at the WPC
World Petrochemical Conference, 2024.
Which was held in Houston.
, just a couple of weeks ago.
As part of my intro, I'm just going to
give you the three things that really were
in focus for me during the conference.
And I think for others as well, and
number one is the energy transition
and the critical role that chemicals
has to play with the energy transition.
The second piece is
around supply chain and.
Um, 20, 24.
Much like 20, 21 and 2022, I think is the
year, the year of the supply chain, right?
Since we've had some dramatic,
uh, challenges with it so
far, already this year.
Um, and I have a great conversation that I
had with Rahul Kapoor from S&P Global that
you'll be hearing, um, and a little bit.
And then the third thing is
that really this expectation
of a future upside, an upturn.
Probably not till the end of the decade.
So don't be looking too closely
for upside because what we really
know is that there's dramatic
oversupply currently in many markets.
So, you know, as a chemical industry
leader and I'm kind of drawing my
conclusions first here, this time
as a chemical industry leader.
What can you do about this and with
this, and when you listen to the, to
this episode, and as you're thinking
about it, Um, What can you be doing?
And so, number one, I would say,
first of all, is understand the role
that you and your company play in
the energy transition, whether it's
providing products for new technologies.
Right.
When I think about.
Batteries and EVs and even, uh,
solar panels and solar cells
and a wide variety of things.
There is no doubt that the
energy transition is not
possible without chemicals.
So that's one piece, um, And then
the second piece that goes with it as
around, you know, reducing your footprint
and your carbon footprint while still
supporting growth, maybe is a little
easier said than done, but nonetheless,
that's, that's one of the considerations.
The second piece is around
building supply chain resilience.
So we've been talking about
this for a few weeks on and
off here on the chemical show.
Um, and really for a couple
of years, about the importance
of supply chain resilience.
This year's events with crisis and the
Red Sea and a crisis in the Panama Canal
have created some dramatic challenges.
Um, What does that mean for you?
And what do you need to be
thinking about doing is number
one, building optionality, right?
So understanding your options
and alternatives as it
relates to your supply chain.
And then number two.
Um, looking at alternatives, right?
So, uh, alternatives in product.
At alternatives and supply points.
Alternatives and suppliers.
Having a really robust strategy
and frankly not just a strategy.
An execution plan that's been
tested and understood and is
ready to go is really critical.
The third piece is preparing
for a future upside.
So there is investment underway, even
though markets are long and they're
going to be long for quite a while.
However, as we all know,
this industry is cyclical and
markets will tighten up again.
So, um, preparing for that future
upside with financial discipline.
And in fact, one of the speakers on
stage talked about the fact that,
um, the focus right now and for the
next several years is truly financial
discipline, particularly in Asia.
It was a, a speaker from Asia who
was referencing this and financial
discipline is really critical.
And then practice playing
a long and strategic game.
So, what I mean by that is really
looking at today's markets and
responding, but don't over respond.
However understand the markets and the
products where you are going to be winners
and losers in the longterm and positioning
yourself to move into those markets,
finding opportunities to differentiate.
Right.
And differentiation is key.
What I think is interesting.
You'll hear from me later.
And, and this was a topic of conversation
with folks when we were talking about
like who's paying for it and how
do we pay for quote, unquote green.
chemicals, whether it be green
ammonia, green, hydrogen, uh, other
products would even talk a lot about
green surfactants and bio-based
surfactants throughout these.
Nobody really wants to pay more for what
is effectively a drop in replacement.
So therefore figuring out how to
create meaningful differentiation.
Understanding your markets,
understanding what you're bringing
to tape the table, what your
customers need and differentiate,
differentiate, differentiate.
That's probably my number one
message for you guys today.
We're going to segue over
to our onsite recordings.
And let me know what you
think about today's episode.
And if you were at WPC, what you heard
and saw and what your takeaways were.
We'd love to hear from you.
Hi, I'm recording today at the WPC
World Petrochemical Conference 2024,
which is sponsored by S& P Global.
The theme of this year's conference
is Positioning for the Next Upturn.
And it's actually been a really
interesting mix of conversations both
on stage and off stage about what that
actually looks like because there is, you
know, a number of key themes around this.
One of which, and in fact, this
is the overarching theme, is that,
yes, well, we're in a bit of a
downturn at the moment, right?
There's no doubt.
Supply, or demand is flat, or
appears to be relatively flat.
We're in oversupply.
Inflation has had an effect.
What's going on in
China has had an effect.
Interest rates have had an effect.
Yet, the industry continues to
be cyclical, and that we are
clearly poised for an upturn.
Maybe not this year or next year.
But certainly when we think about
by the end of the decade, there is
an expectation of significant growth
and investment restarting globally.
So a couple of big themes
that we talked about here
at the conference that I
think are just worth sharing.
Number one is decarbonization.
In fact, I spent a lot of time
this week in conversations around
decarbonization, hearing from people
on stage as well as off stage.
And so what's really interesting is the
onstage carbon onstage conversations for
80 percent of the time where basically
that, Hey Decarbonization is here.
We need to get there.
Um, we need to be investing in hydrogen.
We need to be reducing our
greenhouse gas emissions.
We need to be targeting 2050.
And yet, um, aside from one bold
panelist who talked about how we're
paying for this, that, that was really
primarily the sidebar conversation.
Almost every break I was in
after every panel or every
discussion was Decarbonization is
great, but who's paying for it?
The investment in hydrogen, ammonia,
methanol, um, as the future of the
energy transition is expensive.
It's expensive, it's costly, it
requires a public and private
partnership, and it's not yet
clear, really, who's paying for it.
Because, of course, there's a conundrum,
and, and you guys know this, and I know
this, and, is that, um, People want or
think they want sustainable products.
They want greener products.
They want products with
a lower carbon footprint.
However, they need to be
offering something more.
Otherwise they're not paying for them.
And so this is a little bit of a
dilemma I see is that, you know, if
we think about some of these products
that are very much commoditized,
um, let's take ammonia, for example.
Ammonia is ammonia is ammonia.
Now, okay, somebody who's producing
and selling ammonia, you might tell
me differently, but the reality is
it is very much a commodity product.
And so there needs to be
a bigger differentiator.
People are not buying on product alone.
What is the rest of your
differentiation story?
And that is something that frankly,
we did not talk about a lot here on
stage, but I think it's something to
talk about and we'll be continuing
to talk about on The Chemical Show.
Cause as you guys know, I like to
talk about the customer experience,
how you differentiate your business.
Um, and, uh, How you really create
value and you're not creating
value by doing the same thing.
You have to create value by
understanding your customers' "why".
Creating a differentiation, whether it be
in product or in service or an offering
or how you package it all together.
Um, and that is where the value comes in.
/Hi, I'm here with Rahul Kapoor from
S& P Global today here at WPC 2024.
Um, and we're going to be just talking
a few things about the shipping
industry and what's going on there.
So, Rahul, thanks for joining me.
/
Rahul: /Thanks, Victoria.
Good to be at WPC and welcome.
/
Victoria: /So, first of all,
let's just talk about what's
going on in shipping today.
/
Rahul: /Sure.
I think if you look at the shipping
industry, right, or rather the
shipping markets, what we are seeing
today is it's in the midst of what
we call a geopolitical storm, right?
If I take you back three
years, it started with COVID.
We had all the supply chain disruptions,
massive ones at the end, right?
So we had port blockages, we had all
the stuff at the other end of the
world, and we were waiting for all
the Uh, shipments to arrive in the U.
S.
and other markets, right?
So we went through that, it normalized,
freight rates corrected, freight rates
actually went to record highs, we
were actually looking at 20, 000 per
TEU, and that has made an impact on
many of the chemical companies, right?
So the whole supply chains were disrupted.
We went through that, then we
had Russia, Ukraine, right?
I think that led to
many trade flow changes.
When you look at the pet camps, when
you look at the oil markets and so
on, so that had an impact as well.
And just recently, back in November,
we had this Red Sea crisis, right?
So back to back, shipping has been
facing some of these geopolitical crises.
Uh, just talking about the Red
Sea, and if, uh, you want to go
there, because that's a major
disruption which we're seeing.
/
Victoria: /Yeah, let's, let's talk
a little bit more about the Red
Sea, because obviously, you know,
we thought things had normalized.
And then along comes the Red
Sea crisis, which is a crisis,
you know, not just for shipping.
It's certainly a humanitarian crisis and
a crisis for the people in the region.
But as we think about the
relationship and what it means
to chemical shipping, can you
/
Rahul: /I think there are
two parts to it, right?
So first of all, Red Sea or the
Suez Canal is a global artery
for maritime trade, right?
You can call it a super my time highway,
the 20, 000 ships which pass through that
around 20, 25 percent of the global Uh,
container trade, then you have almost 8
million barrels of products and crudes,
including chemicals passing through
it, both eastbound and northbound.
And then you have LNG LPG, right?
So it's, it's a major highway,
uh, my time, super highway.
What we have here is we have to
understand that, uh, uh, within the
commercial shipping, there's a principle
of freedom of safe navigation, right?
That's been severely challenged.
These are commercial ships which
are passing through a narrow channel
and they become an easy target.
Uh, the only time we've seen
that is back in 1980s when we
had the tanker wars, right?
But otherwise commercial shipping,
despite the wars and all of
that, continues to flow through.
So essentially coming here is
we've seen almost 80 percent off.
Container trade, which
has been diverted, right?
What that means is you're spending more
time at sea, additional two weeks on.
So that is high inventory cost, right?
We did hear about some of the European
customers, particularly suffering
because of this high inventory cost as
well as most, uh, time at sea, right?
So there is a bit of a disruption.
The good thing was demand is soft
as we were talking earlier, right?
So I think that has helped and some of
the capacity has been, uh, coming back.
So overall the impact on prices,
freights are still higher, but they're
not to the level of it's, it's not as
bad as COVID it is bad, but nothing
comparable to what we had back then.
/
Victoria: /Right.
So I think most chemical companies
would not think that demand
being soft is a good thing.
But as you point out, in, in context
of combining it with the shipping
crisis, it certainly has eased some
of the, the concerns and the height of
what the disruption could really be.
That's a good idea.
Yeah.
So, so let's talk about, um,
how this, these geopolitical
challenges start factoring in.
And there's a couple of things that.
When I talk with companies, we're
talking about, one of which is
regionalization, and when we look at
potentially shifting to more regional
supply chains, and in some ways
regional independence of supply chains.
/
Rahul: /Certainly.
I think if you go back and the global, if
you say the global economy has benefited
from globalization in that sense, or
the world trade, right, since China
joined WTO, essentially, you've seen
a lot of increase in the global trade
coming out of 2012 14, when we started
seeing some of these companies as well
as some of the policymakers talking
about a bit of protectionism, right?
We started seeing that some of
the tariffs which came about.
So the global trade
still continues to grow.
But COVID actually brought to the fore
what we call supply chain resilience.
And last year at WPC, we actually did that
track was the supply chain resilience.
And this year we're doing
decarbonization, right?
Supply chain resilience is very important.
And that was challenged
massively in the COVID time.
So there is a small effort
towards what you would call
a French shoring, reassuring.
Right?
Some of these, but China still
stays at the center of the global
factory of the world, right?
It's a very long drawn process.
We've seen some of that move to Vietnam,
India, and so other places, but it's
a very slow process I would say.
/
Victoria: /Yeah, definitely.
And one of the things I've seen and
have heard is that there's some of
this regionalization is kind of North
South instead of moving East West, that
we're going to see more North South.
Which I also think ties into
decarbonization, because when I think
about supply chains and the effect that
they have on emissions, and certainly
Tier 3 emissions, which is, is due
to the supply chain, um, It makes
sense to have shorter supply chains.
So what do you see
happening from that space?
/
Rahul: /That's one of the key topics
which we are covering at WPC, right?
Uh, I'm doing a track chairing essentially
called decarbonization of supply chains.
The first session is about this
chemical value chain and the second
is about the transportation, right?
It is at the core of what's
going to happen over the
next 15, 20, 30 years, right?
Uh, if you look at particularly on the
transport side, right, and we talked
about Red Sea, Uh, energy security
essentially means that the ships
which are rerouting now are emitting
three times to four times more.
So in the times of energy security, the
sustainability goals take a hit because
the ships have to reroute, they're
speeding up, they're spending more time
at sea and burning more fuel, right?
But if you look at what, where we are
coming from, as well as what we look
at, uh, the supply chains, particularly
on the transport side are going
from what you used to call a single
bunker or for that matter, bottom of
the barrel, uh, heavy fuel oil, low
sulfur fuel oil to what we have today
is ammonia, methanol, we're talking
about hydrogen, carbon capture, right?
It's a multi fuel future.
which is going to be costlier, right?
So it will have an impact
on the chemical value chain.
It will have an impact on the global
supply chains in terms of higher costs.
/
Victoria: /Hmm,
that's interesting.
So one of the sessions I was in earlier
today talked about how, um, the costs will
be coming down when we think about energy
transition broadly, not specifically about
the decarbonization of supply chains.
But as these technologies get more
robust, um, higher, uh, higher
supply availability of energy.
So, the question is, how do we get
to the point where we can actually
start coming down the cost curve?
Should we expect to see that in
decarbonization of supply chains?
/
Rahul: /We
should expect to see that, but you
have to take the cost up front.
Right, so the challenge is the green
methanol or green ammonia, right,
so those are very expensive today.
The capacities have to come in and
the industry, particularly in the
supply chain side, is dealing from
that chicken and egg situation, right?
Whether you will get that alternative fuel
today or whether you'll get it 27 and 33.
Right?
So the capacities have to be set up.
The initial cost is going to be higher.
And as it works in the free market,
all of that should settle down.
Victoria: Yeah,
awesome.
So if we think about just three trends
that as it relates to Shipping and
decarbonization, what are the big three?
What would should we
be looking for?
Rahul: I think the first one
would be supply chain resiliency.
I think the three events which
we've seen over the last in, in a
matter of three to four years, have
shown you that supply chains being
resilient is very important, right?
So the companies are talking about that
and we continue to talk about, right?
You will see some of that, uh,
diversification of supply chains, right?
So the industry is very dependent
on a certain regions in that sense.
A bit of that coming back to, I would say
the Americas a bit on the Europe side.
That would be one.
Second is everybody would take
a part, or stakeholders will be
in order decarbonization, right?
So it's a process.
We have to be patient, but it will
take some time, but we'll get there.
/
Victoria: Rahul, thank you for this.
/
Rahul: /Thank you,
Victoria, for having me.
/
Victoria: The second theme that's
really come through is the need
for alignment and collaboration.
Um, and this is really
around, , standards, right?
So at the moment, Right?
We know this.
Every country has its own set of
standards as it relates to reporting,
um, as it relates to sustainability
and decarbonization, which those are
key big things that are driving us,
but it also relates to products and
how we sell and how we don't sell.
And the industry groups have done a great
job when we think about harmonization
It's to chemical products and I think
about REACH as an example, um, while
it started in Europe, it certainly got
global implications and the industry
groups have been very effective in driving
standardization, um, and alignment and
creating a system that works, uh, across
the industry and across the globe.
Not true today when we think about
sustainability and ESG measurements.
It's the targets that are, countries
and companies are expecting us to hit.
Marine Schroeder, who's managing
director of Stolt Tankers, she
expressed on stage, she said, "I
wish we could turn all of the people
that we've got working on reporting.
Um, and the complexities of reporting
because the reporting requirements are
different in every single jurisdiction.
If we could turn all of those people
and that money, that investment
into those people and their time
and resources into innovation.
Into innovations to figure out how to
become, uh, sustainable and decarbonized."
And, um, Developing the future platform
for the industry, both from a product
perspective, from a supply chain
and logistics perspective, and more.
And so that is, you know, a source of
real frustration that I've certainly
heard the theme coming through from
stage is, um, that currently we
don't have a lot of great alignment,
um, on some of these standards.
across the globe and we need to get there.
The second piece that goes with that
is really the request that we are
less prescriptive in terms of how
we get to carbon and greenhouse gas
reductions and instead be and instead
of being prescriptive about the
how be prescriptive about the what.
Right.
And so allow the chemical industry and
the creative minds across the industry
to identify the best and the optimal
products and technologies and solutions
to get us to a more circular, lower
carbon, um, profitable and world that
we're all looking to grow and be part of.
The third piece of that and the
third theme that really comes through
throughout the conference again, both
from on stage and off stage as I talk to
people across the conference is the fact
that the chemical industry is a really
vital part of the energy transition.
And in fact, I spoke with Tony Potter from
S& P Global and I'm going to include a
clip with Tony, so stay tuned for that.
But Tony, um, talked about how we actually
need more chemicals in a low carbon
energy transition world when we think
about moving away from our traditional
energy sources like oil and into
energy sources like solar and wind and
hydrogen We need more chemical products.
Hi, I'm here talking with Tony
Potter, who is the head of
chemicals for S&P Global so, Great.
Tony, we're, we seem to be
living in a world of oversupply.
That's certainly a concern
when we talk to people.
Um, there's been a big discussion
around decarbonization and
what it means for chemicals.
And I think some people see the pros of
it and others perhaps see the cons of it.
Um, but what do you see as the
role of chemicals in the energy
transition and in decarbonization?
/
Tony Potter: Okay.
Well, thanks for the
opportunity to talk with you.
Okay.
Um, I think chemicals are absolutely
essential in the path to decarbonization.
We no longer just talk
about the energy transition.
We talk about an energy
and materials transition.
That's a reflection that to get
to net zero All materials of
fabrication of construction need
in themselves to, to decarbonize.
Um, thermoplastic start off as a
relatively low energy intensive
product relative to iron, steel,
aluminum, glass, uh, whatever.
Um, and, uh, whilst the chemical
industry needs to decarbonize
its processes, um, chemicals and
thermoplastics play a key role in that.
And in most scenarios that we look at,
uh, we see people substituting these
higher energy materials, uh, for plastic.
Uh, you can't lightweight
any form of transportation.
Without plastic.
No one's invented a paper car yet.
Um, you don't build wind turbines
without plastic and you don't
build solar panels without plastic.
/
Victoria: That's a great perspective.
Uh, and I think, you know, the general
public doesn't understand much of that.
Even, uh, I've had conversations
recently in the recent past about,
you know, uh, fuel tanks, right?
Fuel tanks today are all
made out of plastics.
Um, which is why we're Nobody has rusted
out fuel tanks in their cars anymore.
Whereas, you know, probably two decades
ago, that was a major issue for, you know.
Especially if you are
working on an old car.
Tony Potter: And of course as we move
to EVs, you don't need that fuel tank.
That is true.
But as we study the transition to
EVs, uh, maybe the composition of
the plastics changes slightly, but
net we think, uh, we think that more
plastic is used in an EV than in an I.
C.
E.
/
Yeah, that's
Victoria: really, that's
really interesting.
There's a lot of conversation when I talk
with people wondering about are we ever
going to reinvest in chemicals, right?
So we feel that we're overbuilt
certainly in the commodity
chemicals and in plastics.
Um, operating rates are low.
We've built for a world
that's not this current cycle.
Of course, we also know that
our, you know, we tend to be very
cyclical and we like to, um, in
some cases, buy high and sell low.
It seems like when we're
talking about investments in
the chemical industry, right?
Are we going to be investing again?
What do you see?
/ Tony Potter: Yeah, I mean,
I think it's inevitable.
Every, uh, every cycle, someone says this
is the end of cycles, and it never is.
Um, look, this downturn
will End some point.
It is a long, slow downturn,
something like ethylene
operating rates are down to 80%.
It's a long, slow haul back to
reinvestment type margins until
capacity utilization tightens, you
know, towards the end of the decade.
But beyond that, Look, we see a
world where oil demand peaks, uh,
around the end of the decade and then
slowly starts to go into decline.
We see no such peak for petrochemicals.
We're doing forecasts
out more than 30 years.
We've never found anything that
we could describe as peak polymer.
Petrochemical demands will
keep on growing as long as the
population grows and as long as the
wealth of that population grows.
/
Victoria: That seems a
little bit contrarian.
I mean, I, I agree with you on the
fact that we all seem to like to use
plastics, and yet there are so many,
um, you know, I think about the plastics
treaty, which was really around, it went
from, in fact, we heard Jim Fitterling
talk this morning about it going from
being about reducing plastics pollution
to reducing plastic, and now we're back
to reducing plastics pollution, um, I
think there's some people that would say
that's a big, uh, that this continued
growth pattern Maybe cannot continue.
/ Tony Potter: Cannot, but what do you
grow with if you don't grow with plastic?
Okay, so, uh, there's no doubt the
world has a plastic waste problem and
it needs dealing with and legislation is
likely to be passed to deal with that.
Whether it's international treaty or
individual governments, uh, plastic
in the wrong places is a problem.
Um, uh, there's no doubt that the, as part
of the energy and materials transition,
we need to build a more circular economy
and plastics recycle is part of that.
But at the moment, if I take
polyethylene as an example, probably
seven or eight percent of polyethylene
globally is, uh, mechanically recycled.
Okay?
Um, we see that number almost tripling
in the next ten years, but the
underlying demand growth for polyethylene
is still such that we see virgin
polymer demands continuing to grow.
And one of the issues is actually
building out the supply chain to
collect, to sort, to clean waste,
which in itself is carbon intensive.
Um, you know, unless you build a green
supply chain, there's actually a danger
you expend more carbon than you save.
/
Victoria: Right, because it is intensive
to get the recycling and the mechanical
piece of it, and it, it doesn't exist
in many places, and even where it does,
It's not always fully utilized, right?
I certainly know that in my own community,
many people don't recycle, recycle, even
though we have curbside recycling, right?/
Tony Potter: And in, in the U S there are
over 80 different types of legislation,
not even consistent at the state level,
but from municipality to municipality,
what can and can't be recycled.
It's crazy./
It's, it's complicated.
It's very complicated.
Well, Tony, thank you for joining us.
I appreciate your perspective.
/ You're welcome.
Victoria: So that's one factor of it.
And just the continued evolution
of products, innovation,
Lifestyles, et cetera.
So I think, you know, there's no
doubt that, and this was a theme
that came through is that the
energy transition and the chemical
industry are clearly hooked together.
And we're going to be seeing more of that.
So I think there's an
opportunity for innovation.
We've heard from a number of people across
on stage, Karen McKee from Exxon Mobil,
others about the innovation that's going
to be coming through from the industry,
In order to enable the energy transition.
So to sum it up, I would say, you
know, the, the pulse and the theme
of the week is the future is bright.
There is an upturn.
There is a lot of positivity.
There is a concern about how are we
paying for it and who is paying for it.
And are the experts in the industry, um,
scientists, engineers, technologists, to
really develop optimal solutions for us,
for the world, as it relates to energy,
greenhouse gas emissions reductions, etc.
And, clearly a theme
of who's paying for it.
Right, so I think everyone, um, is clear
that the economics have to work, and
that's maybe a big shift, this fact that
we actually need to have, we're shifting
to where this has to make economic sense.
It just can't make theoretical sense.
Sustainability, um, our reduction
in greenhouse gas emissions by
2050 makes perfect sense in theory.
However.
It also has to make economic sense
for companies, for governments,
for individuals, um, in order to
support the drive where we're going.
So anyway, um, that's my
summary from WPC 2024.
I hope you've enjoyed it.
If you attended, send me a note,
let me know what you heard, what
other themes came through for you.
And I'd love for you
to share that with me.
Thanks.
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