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The global market for chemical compounds is something of a complex landscape, more contingent than others on the geopolitical push and pull of the world at large. Swings in commodity prices that don't have a broad effect on the various stock exchanges, as well as minor changes to government regulations, may have massive implications on the well-being of the chemical manufacturing sector.<\/p>\n
As such, those directly employed by chemical companies – as well as businesses reliant on chemicals as part of their supply chain or with other connections to the field – must always keep a close eye on the outside trends that will have a clear effect on the sector. Recent examples of such factors, which we'll examine today, include economic uncertainties in prominent chemical-producing nations, the lingering effects of natural disasters, the rise of renewable chemicals within the industry and more. <\/p>\n
Surge in renewable chemical use and other sustainable practices <\/strong> Sure enough, a study conducted by Genomatica in conjunction with ICIS, which queried representatives of the chemical industry as well as distributors and buyers, found that 65 percent of these businesses' customers had real interest in purchasing substances created using sustainable methods<\/a>. This constitutes a massive jump in appeal between 2014, the last year in which Genomatica conducted this survey, and 2017. Three years ago, only 36 percent of chemical producers expressed that their customers had the same desire to buy sustainably produced materials. <\/p>\n About 80 percent of producers told Genomatica and ICIS they believed sustainable and renewable chemicals would be included in their product offerings within the next several years. A smaller but still notable contingent – 32 percent – said they'd already begun research and development efforts to make these interests a reality. All told, it's clear that the sector stands to create considerable opportunities for market success if these sustainability campaigns proceed as desired.<\/p>\n Geopolitical concerns creating worry among some industry figures, investors <\/strong> Beyond the issues affecting agricultural chemicals, broader economic forces in different parts of the world stand out as reason for caution by those in and tangential to the industry. The blows dealt to the petrochemical field in the U.S. by Tropical Storm Harvey, for one, have yet to be recovered from by firms in the Gulf Coast area of Texas that the natural disaster hit. Specialty chemicals, another major part of the economy in that Texas region, suffered much the same damages. Specifically, the extreme weather adversely affected 54 percent of ethylene production. <\/p>\n On the other side of the world, overall economic downturn has plagued China, with Zacks reporting that 2016's Chinese GDP expansion, 6.7 percent, was the lowest rate of annual growth seen within that nation in 26 years. As one of the biggest producers of chemicals on the planet, any economic negatives experienced by China will ultimately affect the industry to at least some degree, and the country is seeing difficulties across multiple economic metrics. Some of these include rapid credit expansion, steady increases to corporate and overall debt, industrial overcapacity (due to there being more facilities and inventory than there are uses for such resources) and lagging property investment. Additionally, Chinese GDP growth for 2017 and 2018 is expected to be less than what was seen in 2016. <\/p>\n
One need not look far to see evidence of sustainability's appeal to a broad group of consumers. Given the equally apparent record of controversies weathered by chemical producers, incorporating techniques more beneficial to resource maintenance seems like it could be a logical progression.<\/p>\n
While the market for sustainable and renewable chemicals appears positive per the analysis mentioned above, agricultural chemical producers aren't doing quite as well, with nitrogen and phosphate lagging due to weak pricing despite the successes seen in potash sales. This trend constituted one of several potential reasons for hesitance<\/a> identified by Zacks in one of the equity research firm's most recent analyses of market well-being in the chemical sector. <\/p>\n