Mr Bünger, at the VCI, you work in economics and accompanied the future study “Chemistry 2030”. Which developments do you see influencing the sector in fifteen years’ time?
Overall, we are observing six megatrends. These include the varying demographic developments in advanced, developing and emerging economies, as well as aspects concerning globalization and world trade. On top of this, we look at resource scarcity, technology and innovation, and the environment and climate protection. Factors that limit growth, such as high public debt levels in Europe or poor infrastructure in India, are also important.
What do these trends mean for the individual regions?
In our prognosis to the year 2030, we assume that despite unfavorable conditions, the global economy will be able to regain the growth levels of three per cent that we saw before the financial crisis, as emerging economies grow much more dynamically than advanced ones. The USA will be able to hold on to its position thanks to shale gas extraction and its high attractiveness for skilled workers, whilst western Europe and Japan will lose market share to emerging economies, particularly China. However, with a global share of around 24 per cent, European Union will remain an important market for chemical products. Although Germany will also have to give up market share, it will eventually find its role in the world, aided of course by its competitive industrial sector.
That sounds like a new balance of power.
Correct. This development is being driven above all by the advancing industrialization in China. We assume that China’s contribution to growth will grow significantly. In the textile industry, we believe this will be at around 80 per cent by the year 2030, and 61 per cent in the chemical industry. This dynamism will lead to China expanding its share of global chemicals production from 29 to 47.1 per cent. Europe (not including Germany) will lose eight per cent, but will remain the second-largest force with 16.5 per cent. They are followed by the USA with 12.1 per cent and Japan with 7.4 per cent, both suffering losses of around three per cent. Germany’s share of global chemicals production will fall from 5.6 to 3.4 per cent.
But this is no cause for concern. Just because the individual slices of the pie are smaller, it does not mean growth is impossible, as the pie itself will be much larger. This is largely down to growth in the global population to 8.3 billion people and the strengthening of the middle class in emerging economies. Overall, the study estimates that the global chemicals market will see annual growth of 4.5 per cent up to 2030.
Those are some impressive numbers. Where are the markets of the future from a product perspective?
Classified according to the three sectors: basic chemicals, fine and specialty chemicals and pharmaceuticals, we get the following picture. While the basic chemical sector will grow strongly in countries that have access to raw materials, we see a trend in resource-poor economies towards the production of higher value chemicals like paints, varnishes or lubricants. The USA will play a special role here, as it is driving both sectors. Countries like Germany or Japan will change their structures towards fine and specialty chemicals, and will be aided in this by the focus on research intensive and usually low-margin special products. But this does not mean that basic chemicals will vanish here. This is part of an integrated production process, which combines multiple stages of the value creation chain and refines the basic materials locally. Just as important for more advanced chemicals regions is the dynamic growth in the pharmaceuticals sector, even if the emerging economies will also strengthen here, such as India is in generic drugs.
Resources are becoming scarcer, and China is lagging when it comes to climate change and environmental protection. What are the impulses coming from these factors?
Our eff orts to develop shale gas and deep sea deposits do not change the fact that raw materials will become scarcer and therefore more expensive in the coming years. But these new production options do relieve the upward pressure on oil prices, which European economies can also benefit from. Fortunately, more value is being placed around the world on climate change and environmental production. Whilst
China is still undertaking relatively small steps, the German chemical sector has been able to reduce absolute greenhouse gas emissions by 49 per cent since 1990, whilst increasing production by 60 per cent. But there is not much more room for improvement here. At the same time though, environmental and climate protection also off ers opportunities for new products, such as insulation materials or high performance lubricants for wind turbines.
What is the key for individual players to still be internationally competitive in 2030?
For the traditional advanced economies, innovations are particularly important. As well as the move towards specialization, greater material and energy efficiency are required. Further potential lies in the continuing processes of automation and digitalization. Globalization can also bring a number of benefits for certain regions, particularly if it succeeds in removing trade barriers through bi-lateral or preferably multi-lateral agreements. Infrastructure improvements, such as the construction of roads, bridges, pipelines, deep-sea ports or LNG terminals are also needed, especially in Germany. Last but not least, we need politicians to confront bureaucratic hurdles, for example through more efficient regulation within the EU. This also applies, however, to emerging economies like India. There is great potential here in internal trade.
One more question: what does this future scenario mean for a manufacturer of explosion protection equipment like BARTEC?
Demand for these products will of course rise with the growth of the global chemical industry. If you take a quick look at the company’s product portfolio, you will see market opportunities – for example in plant safety, remote maintenance or mobile data access. This kind of specialization, combined with innovative solutions, will always be of benefit to the chemical sector.