Possible Threats that Chemical Industry Might Face in 2017
Eurozone – The European Union went through few challenges in 2016, even known that Eurozone GDP rose by about 0.4%, the region is still struggling to create any major scope of business for the chemical industry. In addition, experts predict many uncertainties could happen over the trade agreements between the region and U.S which are backed by Trump administration.
The situation in Chinese Market – The second largest economy in the world and one of the important players in the chemical industry, in 2016 China had 6.7% GDP expansion which matched the previous annual GPD for the first time in 26 years. The slowdown in private investment, growing corporate debt, industrial overcapacity and geopolitical uncertainties brought up by North Korea might fall over the chemical industry in the region.
Price Barriers in Fertilizer and Agrichemical space – The pricing environment, especially pushed by overcapacity production, leave out the fertilizer and agricultural companies in the difficult situation. As we know, the price of potash is to drop even further due to the overcapacity production. The global market of potash, facing inevitable fate where the suppliers have to cope with the harsh pricing. By observation, we can say that nitrogen is following a similar trend. New production lines together with excessive outputs will affect the bottom line pricing. The situation in North America, as we saw the rise of nitrogen capacity will further affect the pricing environment in 2017-18.
The situation in the Energy Sector – The global situation in the energy sector, especially the market of crude oil still in an unfavorable situation for suppliers. Extensive production led the prices to the bottom line. Even known, today a barrel of crude oil is trading at $50.46 and backed by expert noting that it will stabilize in the future, it won’t leave the suppliers calm because of fracking activities in the US. It affected the oil processing chemicals, the prices shrank and it will correlate in the future depending on the situation in the energy sector.