Global Chemical 2030 - Roland Berger - 2011
Global Chemical 2030 - Roland Berger - 2011
Global Chemical 2030 - Roland Berger - 2011
November 2011
Chemicals 2030_FINAL.pptx
Because the chemical industry is becoming more volatile than ever, Roland Berger has assessed its market dynamics
Motivation for the Roland Berger market study "Chemicals 2030" How to assess a dynamic market
"CHEMICALS 2030"
The study has been developed by our global chemicals experts network in cooperation with academic partners and major companies
Roland Berger contribution to the Chemicals 2030 study
ROLAND BERGER CHEMICALS EXPERTS
The study reflects the experience of the Roland Berger Chemicals & Petrochemicals team: More than 85 professionals working on more than 100 chemicals projects per year contributed to the study NAFTA Antonio Benecchi GERMANY Veit Schwinkendorf Alexander Keller Walter Pfeiffer UK David Stern IBERIA Antonio Bernardo Christoph Beseler ITALY Roberto Crapelli MIDDLE EAST Christian von Tschirschky Jaap Kalkman CEE and CIS Uwe Kumm Codrut Pascu Vladimir Preveden Nikolay Grachev BENELUX Tijo Collot d'Escury Alexander Belderok Eric Baart Frank Lateur JAPAN Masugi Kaminaga GREATER CHINA Watson Liu Charles-Edouard Boue Jennifer Wilson
SCANDINAVIA Jan Beckeman SOUTH-EAST ASIA Anthonie Versluis FRANCE Michel Jacob Olivier de Panafieu LATIN AMERICA Thomas Kunze
Industry trends, growth numbers and rival strategies will characterize the future chemical industry
TRENDS External and internal trends will shape the industry and impact profitability and growth
Future
2
3
NUMBERS Limited high-growth options will increase company focus so that margins are maintained
STRATEGIC RIVALRIES Rivalries between different strategies and geographical regions will shape the industry
Chemicals 2030_FINAL.pptx
Eight key industry trends will transform the chemical industry towards generally lower profit margins and lower growth
General conclusions on key industry trends In 2030,
1
2 3 4 5 6 7 8
Sustainability has become part of the corporate DNA on a global scale, like HSE has today Demand shift has accelerated and chemicals companies have continued to follow their (end) customers into all emerging regions New competitors not only play a dominant role in their home markets, but also heavily tap into the mature markets to advance their technological skills New business models have become more distinctive and chemicals companies step into (downstream) customer industries to increase profitability Innovation is still a key differentiator, but only in specialties shorter product lifecycles and simultaneous introductions have led to increased focus on R&D effectiveness Commoditization has also affected several products and segments, that are currently still distinguishing Biotechnology has created a paradigm shift in chemicals production with its feedstock alternatives and entirely new production routes Feedstock access remains a key challenge: the feedstock and energy balance has shifted to bio-based countries and feedstock access determines one's competitiveness
Chemicals 2030_FINAL.pptx 5
Each segment will be affected, but by different trends and in different ways
Assessment of trends by selected segment
Petrochemicals Agrochemicals
Engineered plastics
Commodity plastics
1 2 3 4 5 6
Competition rivalry
New business models Innovation Commoditization Biotechnology Feedstock access
7
8
Chemicals 2030_FINAL.pptx
Impact by segment
Inorganics
Fertilizers
The study starts with the chemicals landscape in 2010, a EUR 2 tn turnover industry Our study covers 98% of the market
Global chemical market value by segment and region, 2010 [%]
Segment split [%] (Total: EUR 2.0 tn) Geographical split [%] (Total: EUR 2.0 tn)
Consumer Industrial gases chemicals2) 2% Petrochemicals 15% Synthetic 26% rubbers 1% Other bulk chemicals1) 11% 2% Inorganics 3% 1% 12% Commodity 4% 20% plastics 1% 1% Engineered plastics Other specialties Fertilizers Paints & coatings Flavors & fragrances Agrochemicals
1) Other bulk chemicals includes intermediates 3) Rest of the World include Middle East, Africa and Oceania
Europe
24%
Asia 43%
21%
Latin America
Source: Cefic; DB; JP Morgan; Tata strategic; Roland Berger Chemicals 2030 market model
The market will more than double in the next 20 years even though growth levels will decrease
Total chemical market real value forecast, 2000-2030F [EUR tn]
CAGR [%]
5.0%
4.9%
4.8%
4.6%
4.3%
4.2%
COMMENTS NAFTA and Western Europe will grow slightly (only 2% p.a.), just below expected GDP growth Asia, Middle East and Latin America will drive the chemical industry's future growth (5-7% p.a.) China will surpass Europe and NAFTA as the largest chemicals region in the world, but also India and other Asian countries remain interesting growth areas
4.9
Note: Value forecasts are not corrected for inflation after 2010, i.e. 2010 price levels
Source: Roland Berger Chemicals 2030 market model Chemicals 2030_FINAL.pptx 8
Plastics and specialty chemicals in Asia will be the most attractive high-growth segments remaining
Total chemical market real value forecast by segment and region, 2000-'30F [%, EUR tn]
2000 Total: EUR 1.3 tn
0.36 0.11 0.02 0.49 0.27
Bulk chem. Specialty chem. Consumer chem. Plastics & rubbers Fertilizers
Bulk chem. Fertilizers Consumer chem. Plastics & rubbers Specialty chem.
Bulk chem. Fertilizers Consumer chem. Plastics & rubbers Specialty chem.
Asia
Latin America
Europe
Chemicals 2030_FINAL.pptx 9
The next decades will be shaped by rivalries between different strategies in chemicals
Profitability and type of chemicals business for selected companies, 2010
30% Feedstock access 25% 20% EBIT margin 15% 10% 5% 0% -15% Low Share of specialties High Cost leadership COMMENTS EBIT margins reach up to 27%
Competing strategies seem connected to specific segments In the basic and bulk chemicals segments, companies with feedstock access rival with cost leaders for market share and margin In the specialty segments, companies with brands and/or customer access rival product technology and/or application leaders for market share and margin Most companies tend to focus on either low or high specialty portfolios some companies operate multiple business models in many markets
Chemicals 2030_FINAL.pptx 10
The nature of the rivalry depends on the segment and puts a total EUR 1.1 tn of chemicals turnover in play
Schematic rivalries in the chemical industry and value in play [EUR 2030]
Past decades' rivalries
Feedstock access Future decades' rivalries COMMENTS In the basic and bulk chemicals segments, the rivalries are a global or continental game which mainly took place in the previous decades In the specialty segments, the rivalries are a local game, mainly played in Asia as main growth region these rivalries will take place in the coming decades Private equity will play an important role and support Asian companies in acquiring technology from western companies to leverage their customer base Low Share of specialties
Note: Market value in play for the rivalry is calculated by assuming that all regions will have the same demand per capita as NAFTA has in 2030
Source: Roland Berger Chemicals 2030 market model Chemicals 2030_FINAL.pptx 11
High
Demand shift to Asia will trigger rivalries between regions for market access or technology/application access
Rivalries for Asia Schematic
Market access Western chemicals companies bring technology or application leadership to Asia They will battle for market access, e.g. through joint ventures, and will return with revenues and profit
Technology and application access Asian chemicals companies have market access, but need technologies or applications
Source: Roland Berger Strategy Consultants
They will become active on the M&A market, enabled by private equity, and will return with acquired technologies
Chemicals 2030_FINAL.pptx 12
Uncertainties remain, but the recent crisis and our analysis suggest that the industry will weather potentially disruptive developments
Disruptive developments for the chemical industry
1
Large industrial zones in emerging economies will change the economic landscape PI breakthroughs allow the chemical industry to produce more effectively and efficiently, thus remaining competitive in mature regions
Logistic costs and physical constraints show significant volatility, and recently even independence of crude prices
The Bio Based Economy (BBE) is about to break through, but many uncertainties exist about its impact on the chemical industry Value chain optimization will lead to a paradigm shift in the chemicals business: more decentralized production Political unrests, social turmoil and terrorism might stagnate growth, as recently happened in the Middle East and Northern Africa Financial and economic uncertainties might hamper growth on a global scale The recent crisis started in the US and spread rapidly
Chemicals 2030_FINAL.pptx 13
The scenarios deviate only slightly General demand will only vary within a range of -10% to +20%
Scenario analysis
Strong growth in mature markets, booming growth in developing world GLOBAL PROSPERITY Increasing spend in mature markets, booming spend in developing world, strong demand for new products and innovation Innovation as a global differentiator, commoditization offset by R&D
Model outcomes
EUR 5.8 tn
Moderate growth in mature markets, strong growth in developing world STEADY STATE Stable spend in mature markets, increasing spend in developing world, focus on developing world for growth Innovation focus in mature markets and commoditization in developing world Stagnation in mature markets, moderate growth in developing world REGIONALIZED WORLD Stagnating spend in mature markets, stable spend in developing world, localization of operations and footprint
EUR 4.9 tn
EUR 4.3 tn
Chemicals 2030_FINAL.pptx
14
Chemicals companies around the globe should start preparing for the challenges ahead
Future challenges for chemicals companies
PROFITABILITY Trends impacting profitability: Sustainability New business models Commoditization Biotechnology Feedstock access Geographical regions impacting profitability: Mature markets will face increasing competition with continuing margin pressure Business model impacting profitability: Choice of business model will determine future profitability
Source: Roland Berger
GROWTH Trends impacting growth: Demand shift New competition Innovation Feedstock access
Geographical regions impacting growth: Growth will be possible in Asia, which is close to consumption growth Business model impacting growth: Choice of business model will determine future growth potential
Chemicals 2030_FINAL.pptx 16
Answering some key strategic questions will help chemicals companies prepare for these challenges successfully
Discussion points
What strategy will get me profitable growth in Asia? How can I best prepare for the rivalries to come? Should I pursue single or multiple business models? How can I mitigate enduring volatility? How can I resist profit erosion in mature markets?
Source: Roland Berger Chemicals 2030_FINAL.pptx 17