Specialty Additives play a vital role in keeping public
health and safety and national security. How is COVID-19 affecting the
specialty additives segment, what are the recovery direction, and what are the
lessons for the specialty additive industry?
At the beginning of 2020, the world faced with one of the
significant economic, financial, and social crises: the COVID-19 pandemic.
While the complete consequences are yet to be fully known, it is the chemical
industry, and in particular specialty additives, that have played an important
role in keeping public health & safety and national security. As the global
pandemic unraveled, the specialty additives industry continued to put forth
efforts to meet urgent supply needs to be caused by COVID-19, including increasing
the production of chemicals and materials used in disinfectants, hand
sanitizers, and personal protective equipment.
Impact of Coronavirus on the specialty additives segment
In the recent few months, the specialty additives industry,
like others, was focusing on managing safety, operational risks, supply chain
disruption, and coping with the financial burden. Thanks to the essential nature of
production, chemical manufacturing carried on through the pandemic. Regardless
of the circumstances, society still required to eat, drink and wash, and
therefore packaging played and continues to play a critical role over the
coming months. Therefore, we expect the low impact of COVID-19 on the packaging
As the world continues to be concerned about health and
safety, growth in sales of industrial and institutional cleaners, disinfectants, and sanitizers are higher than usual. For example, demand for hand sanitizers
and disinfectants in January 2020 increased by a substantial number as compared
to December 2019. Therefore, as demand grew, makers of household cleaning
supplies and hand sanitizers were rising up production.
Current market conditions are bringing abiding cynical
consequences in the construction sector. Disturbance includes canceled and
delayed projects, and declining demand for dispensable projects related to
entertainment and sports facilities. This impacts demand for necessary
construction chemicals such as concrete admixtures, emulsions, waterproof
coatings, and many others.
What next for the specialty additive industry?
As economies are moderately reopening for business,
companies are turning their heads towards recovery. There are many various
dynamics across industries that will influence the specialty chemicals
industry in the mid-term as well as long-term. There remain two main questions
unanswered. How will the long-term demand pattern look like? Should we invest in
new dimensions of a particular product and in particular markets?
As of the current situation, we forecast the following
developments in the chemical industry over the mid-term (2-3 years). In
general, demand for specialty chemicals is expected to return to the
historically projected GDP. However, segments which rely on macro trends for
their growth are more likely to return to their normal long-term growth course.
Nevertheless, we still anticipate that chemical companies
will continue to grow organically through expansions of their capacity. However,
this expansion will become more targeted and follow more well-defined growth
opportunities and privatization in the specialty additives space is likely to
accelerate as a result of value chain disruptions caused by COVID-19.
The current economic downturn brings noteworthy disruption which
brings extensive pressure on the ability of the chemical sector to remain
profitable, cash flow. Companies will be able to survive and thrive during this
challenging time only if they will be able to manage and maintain vital cash
The Digital Revolution is widely discussed over recent years. However, it is now when companies will be really pressured to
do more with less and will start looking at investing more in information
technology, and digital solutions to increase efficiency.