View the article in Plastics News here.
Maine Pointe's Mark Montanari served on a recent webinar panel hosted by Petrochemicals Update and Reuters News. The panel included executives from BASF Corp. and Saudi Basic Industries Corp (SABIC) discussing the short – long term impact on the North American petrochemical supply chain industry. As the petrochemicals industry moves into recovery mode from COVID-19, Mark said firms will look at who their right #supplychain partners are. "They might create new partners if they think the old ones are too risky," he said. "They'll rethink relations across the value chain."With supply chains coming under greater scrutiny, transforming the supply chain into a tool for creating shareholder value is an art form that extends its scope and transforms it digitally. The presence of a hyperconnected global supply chain – along with unexpected risks like the global pandemic – have pushed the CFO’s office into a much more strategic role.
By Frank Esposito
Those were the main takeaways from an April 16 webinar hosted by Petrochemicals Update and the Reuters news service. The event included executives from BASF Corp. and Saudi Basic Industries Corp. (Sabic).
"There have been some imbalances, with some markets impacted more than others," said Bret Bement, North American petrochemicals supply chain director with BASF. "Automotive is down, but other markets like [information technology] and health care are relatively strong."
He added that because BASF has many integrated facilities making numerous products, "some materials have been sold, others are still trying to find homes."
"Auto customers are closed, but health care with disaster-related orders is seeing demand as good as ever," he said.
Material carriers are in the same situation as resin firms, he added. "Certain lanes of business, like grocery stores, are really hot, but others remain closed," Jepson said. "We need to find each one and get them the capacity they need."
Sabic also has been making an increased number of air freight shipments, which Jepson said "need a lot more babysitting in getting the order out the door."
Bob Verret, chief information officer at Dupre Logistics LLC in Lafayette, La., said that some polymer shipments to China have been affected by COVID-19, but producers "are trying to keep going."
Some service businesses are seeing cash flow challenges because of reduced demand from construction and maintenance, according to Mark Montanari, chemicals, oil and gas vice president of logistics firm Maine Pointe in Houston.
Any plastic material selling into the oil and gas market "is obviously down," added Chad Burke, president and CEO of Economic Alliance Houston Port Region.
COVID-19 also has changed schedules for BASF.
"Instead of a monthly cycle, we're looking at weeks and days," Bement said. "You find out how good your teams are. We need to manage inventory and get insights from customers.
"No one knows what's going to happen tomorrow," he added. "A plant could be closed because of a positive case [of COVID-19]. We have to make decisions based on what we know at the time."
A recent poll of members of the Houston Port Region Economic Alliance found members split almost evenly between expectations of a v-shaped or u-shaped economic recovery from COVID-19. 47 percent of members are expecting a v-shape, with 45 percent expecting a u-shape and the rest undecided.
"There was nothing fundamentally wrong with the economy," Burke said. "Forecasts heading into 2020 expected a good year.
"Now, what re-engagement looks like is depending on how long stay at home orders remain in place," he added. "There will be a gap in lost revenue, but we can get back on track. We need to see how these next 4-6 weeks play out."
As the petrochemicals industry moves into recovery mode from COVID-19, Montanari said firms will look at who their right supply chain partners are. "They might create new partners if they think the old ones are too risky," he said. "They'll rethink relations across the value chain."
Moving ahead, petrochemical firms "need to select partners with transparency, ones that you can trust what they say and that have common goals," BASF's Bement added.
On the demand side, BASF has seen increased volume for some materials, but Bement said that some of that might be "the hoarding effect" and will go down as businesses re-open. Other businesses such as automotive and even tires might never recover missing sales, he added.
"People have gone two months without driving," Bement said.
Overall, petrochemical firms are better suited than those in other industries to make it through a crisis like COVID-19, according to Burke at the Houston Port Region.
Burke also said that as companies begin to re-engage, they'll re-evaluate their best practices and the way they want to do business.
"Some dynamic changes can come out of this," he added. "But this is an industry founded on safety, and we have the best people in world working on it."