The oil and gas and chemical sectors are expected to start to recover in Q3 2020
Dubai, United Arab Emirates, 14 June 2020 – The chemical industry in the Arabian Gulf must plan and prepare for the post-COVID period, turning adversity into advantage, and capitalize on the lessons learned to retain and enhance its global competitiveness, according to the Gulf Petrochemicals and Chemicals Association (GPCA).
In a newly released white paper entitled ‘COVID and Chemicals’ GPCA provides exclusive insights into the impact of the coronavirus pandemic on supply and demand, petrochemical prices, the dual shock from the pandemic and the oil price collapse, as well as the implications on the region’s supply chain and international trade. According to the paper, the pandemic is revealing flaws in the supply chain that the chemical industry has relied upon for decades, which presents an invaluable opportunity to address existing weaknesses and transform the region’s supply chain.
Like the chemical industry globally, the GCC petrochemical sector has felt the strain from the COVID-19 pandemic in the form of plunging petrochemical prices, disruptions on the Chinese market, travel and export restrictions, as well as collapsing demand due to a slowdown in key end-user industries. On the positive side, demand for products used in the manufacturing of sanitizing products, personal protection, and health care remained upbeat and the production of fertilizers was not impacted. For chemicals used to fight COVID-19, prices have stayed moderate, while fertilizer prices improved by 3% in March 2020 compared with February 2020.
According to estimates by global consultancy firm McKinsey, the oil and gas and chemical sectors will start to recover in Q3 2020. Prices are expected to rebound with the resumption of consumer demand. However, if the situation persists and prices remain depressed beyond a year, the long-term impact will be severe.
Dr. Abdulwahab Al Sadoun, Secretary General, GPCA, commented, “These are unprecedented times for the industry not just in the region but all over the globe, and GPCA remains committed to supporting its members in navigating the ongoing challenges. With this in mind, GPCA has released its latest white paper on the impact of COVID-19, which provides exclusive insight into implications for the regional chemical industry and highlights the opportunities to transform the challenges into opportunities.”
He added, “The time is now for chemical players to focus on key areas to strengthen their competitive position and emerge stronger from the crisis. Companies must study lessons learned during COVID-19 period to improve their organizational effectiveness. They can further use changing consumer attitudes due to COVID-19 as an opportunity to improve their product offering, address new customer needs and focus on innovation. Finally, the COVID-19 crisis has amplified the importance to diversify regional economies and focus on value-added chemicals that can not only play a key role in providing unique solutions in healthcare, but help insulate the region from future oil price shocks.”