The impact of Covid-19 on the chemical procurement industry

In the past six months, the chemical industry has been hit by some major challenges, especially the outbreak of cowid-19.

The imminent destruction pile up in excess of requirement of novel coronavirus pneumonia. The automotive, transportation and consumer goods industries are one of the hardest hit end markets, with demand for chemicals falling by as much as 30%. On the other hand, demand for pharmaceuticals, food additives and disinfectants is peaking, with chemical companies that come into contact with these industries reporting record exports.

What does this mean for purchasing?

Even the best purchasing leaders suffer from the popularity of cowid-19. They have never been asked to play such an important role in maintaining the company’s financial viability and protecting severely disrupted supply bases, while shifting to a fundamentally different way of working. Because they are required to ride the current supply side storm and set the path for reshaping their organization in a post crisis world.

The initial response after the pandemic focused on managing the upstream supply chain to minimize any disruption to primary and secondary suppliers. In some enterprises, we note that the challenge comes from short-term purchasing decisions aimed at minimizing disruption. The scale of enhanced contingency planning is too small in some major chemical production plants that are not ready to deal with multinational failures.

The future protection supply chain has become and will continue to be a topic of discussion in the industry, because this pandemic highlights some major risks in terms of pressure resistance.

By classification, the production of each chemical is declining. However, the production of synthetic rubber and special chemicals, such as paints and coatings, has been the hardest hit. Demand for paints and coatings decreased due to the suspension of construction activities and lower demand in the automotive and other industrial sectors. Travel restrictions directly affect the demand for petrochemical products, including butadiene, synthetic rubber and acrylonitrile butadiene styrene, which is mainly used in tires.

As people travel less and countries close their borders, the demand for transportation and the automobile industry declines, resulting in a greater decline in tire demand, which in turn has a huge impact on the demand for synthetic rubber.