MOSCOW (MRC) -- The European petrochemical industry faces short-term and longer-term challenges caused by or exacerbated by the COVID-19 pandemic. Speakers on Monday at the European Petrochemical Association’s (EPCA) 54th annual meeting, being held in a virtual format, said the crisis had been a learning experience for the industry, said Chemweek.
Bernard Pinatel, president/refining and chemicals at Total, said that for the industry to set its future priorities, it must learn from the crisis. He highlighted four main “takeaways” from the pandemic: uncertainty and how to deal with it, the need to diversify end-use markets and supply chains, the importance of internal and external communication, and the challenge of climate change.
Pinatel said that the immediate uncertainty caused by the pandemic “shows you just have to focus on what you control and be excellent. If you focus on that, it’s the best way to weather the storm and crisis,” he said. Petrochemical companies should focus on “costs, cash, how you allocate capital, and how you operate your assets” rather than looking to unknowns such as the shape and timing of the recovery, which are beyond the industry’s control.
The need for petrochemical companies to diversify end-use markets has been demonstrated by the uneven impact of COVID-19 with some customer industries, such as automotive, suffering more than others. Supplying polymers to the auto industry has been “a nightmare,” Pinatel said. "So, diversification is a must. A diversified portfolio is the best way to be resilient in a world of uncertainty,” he said.
There have been calls for less globalization of supply chains and the relocalization of production, because the crisis has highlighted some vulnerabilities. Pinatel rejects this as “a quick fix” and not a long-term solution. The industry should instead diversify its supply chains and not rely on a single country to source products, he said. Uncertainty has made clear communication more important than ever, Pinatel said. “COVID-19 is a test of leadership,” he said. “You have to be simple and straight to the point externally and internally. You have to act quickly, align quickly, and deliver very simple messages."
Digital technologies, developed and rolled out relatively recently, have played a crucial role in enabling communication in the crisis and could lead to fundamental operational changes for the petrochemical industry, Pinatel said. “Digitization may be a solution to operate industrial assets from remote locations,” he said. The industry, meanwhile, can and should address climate change as it emerges from the pandemic, Pinatel said. “The challenge is for the industry to recover, grow, and combine this with CO2 reduction. And we need to provide our customers with solutions to reduce their emissions,” he said.
Total has committed to reach net zero emissions by 2050. Pinatel cited the company’s recently announced project to convert its refinery site at Grandpuits, France, into a “zero oil platform.” This will involve transforming the site to make biobased products including sugar-based bioplastics. “The concept is completely designed around the circular economy,” he said.
The European petrochemical industry “will play a key role through innovation and technology to develop low-carbon solutions,” Pinatel said. “With this crisis, the industry has a role—to be at the forefront of tackling the climate change challenge,” he said.
Meanwhile, the crisis has shown the importance of the petrochemical industry and its products, many of which are used to tackle the pandemic, said Thomas Casparie, executive vice president/global chemicals at Shell. “Our industry is vital, but really the last few months have made this even more apparent,” said Casparie. The industry also showed its agility in being able to adapt immediately to the crisis, he said.
Petrochemical companies face many challenges including those that pre-existed the crisis, Casparie said. These include cyclical challenges on the supply side with large capacities coming onstream, particularly in Asia. Meanwhile, refineries are struggling to be profitable and Casparie sees possible upward pressure on the price of naphtha, the main feedstock for petrochemicals in Europe, in the long- and short term. “But refineries could increase their output of petrochemicals,” Casparie said.
Meanwhile, the industry must respond to changing expectations from customers and consumers for more sustainable products and operations. “Consumer expectations are changing,” Casparie said. “The world is demanding more sustainability, and our customers are responding to that. He cited the example of Unilever, which has committed to stop using fossil-based chemicals in its laundry and cleaning products by 2030.
According to MRC's DataScope report, Russian companies significantly raised their purchasing of PP in foreign markets in August partially because of a major increase in demand, imports were 21,200 tonnes versus 17,200 tonnes a month earlier. Thus, overall PP imports into Russia reached 143,200 tonnes in January-August 2020, compared to 120,100 tonnes a year earlier.