09/11/2017
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09/11/2017
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09/11/2017
“Chemistry and the Economy: 2018 Outlook”
William Carroll
Paul Hodges
Adjunct Professor of Chemistry, Indiana University and Founder, Carroll Applied Science
Chairman, International eChem
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CREATIVE ENERGY FOR IMPORTANT ISSUES
Entering the Great Unknown
9 November 2017 Page 16
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09/11/2017
The pH Report About IeC: International eChem (IeC) is a London-based strategy consultancy advising Fortune 500 and FTSE 100 companies, investment banks and fund managers.
Paul Hodges is a trusted adviser to major companies and investors, and serves as a Global Expert with the World Economic Forum. He is a regular speaker at international conferences, and writes regularly for the Financial Times and other leading media. He has been widely recognised for his pioneering work in identifying the impact of ageing BabyBoomers on the economy, and for his foresight in warning of the 2008 financial crisis. Paul is also non-executive Chairman of NiTech Solutions and a Director of Recycling Technologies. Prior to launching IeC in 2001, Paul worked in senior positions in petrochemicals and chloralkali for Imperial Chemical Industries (ICI) in the UK and USA, and was Executive Director of a $1 billion ICI business. He is a Member of the Energy Institute and a Freeman of the City of London. He is a graduate of the University of York, and studied with the IMD business school in Switzerland. Page 17
CREATIVE ENERGY FOR IMPORTANT ISSUES
The pH Report www.thephreport.com
Due Diligence
Keynotes
Project advisory
Senior Management
Workshops
Projects
Strategy/Planning
Making It Happen Page 18
[email protected] +44 20 7700 6100
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09/11/2017
SUMMARY The world has moved into the Great Unknown in terms of the economy, politics, social factors
The idea that we are seeing a “synchronised global recovery” is highly imaginative Oil markets highlight the problems caused by overoptimistic projections of demand growth 4 key scenarios could challenge today’s “business as usual” mindset in 2018 Companies can continue to hope for “business as usual” or start to refocus on sustainability via services Page 19
“THERE ISN’T ANYBODY WHO KNOWS WHAT IS GOING TO HAPPEN IN THE NEXT 12 MONTHS. WE’VE NEVER BEEN HERE BEFORE. THINGS ARE OUT OF CONTROL. I HAVE NEVER SEEN A SITUATION LIKE IT.”
KEN CLARKE, FORMER UK FINANCE MINISTER, FEBRUARY 2017
Global Outlook – What is the ACC data trying to tell us Oil Markets – is the recent recovery for real, or is the OPEC-Russia output freeze likely to disappoint? 4 Key Scenarios for 2018 – Will they challenge “business as usual”? Demographics Drive Demand – Do ageing populations mean lower demand for “stuff”, how can producers profit from sustainability? Page 20
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09/11/2017
LATEST IMF FORECASTS SHOW NO REAL IMPROVEMENT OVER THEIR 2016 FORECAST
Page 21
CAPACITY UTILISATION HAS NEVER RECOVERED TO PRE-FINANCIAL CRISIS LEVELS
Page 22
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09/11/2017
CHEMICAL FORCE MAJEURES HAVE BEEN AT RECORD LEVELS SINCE Q4 2014
Page 23
INSURED LOSSES FOR CHEMICAL PLANTS HAVE RISEN AS PLANT OUTAGES AND SIZES INCREASE
Page 24
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09/11/2017
Audience Challenge Question ANSWER THE QUESTION ON BLUE SCREEN IN ONE MOMENT
According to the Insurance Information Institute, what percentage of homes in Houston (Harris County) have National Flood Insurance? • About 5 percent • About 15 percent • About 25 percent • About 50 percent • About 75 percent
HURRICANE HARVEY HAS CAUSED A MASSIVE AMOUNT OF WEALTH DESTRUCTION “The whole area has been pushed down by 2cm due to the weight of water that fell” NEVADA GEODETIC LABORATORY
“An estimated 70% of the 2700 sq. km area (in Houston), was covered with 50cm of water” HARRIS COUNTY METEROLOGY DEPT
Page 26
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09/11/2017
“THERE ISN’T ANYBODY WHO KNOWS WHAT IS GOING TO HAPPEN IN THE NEXT 12 MONTHS. WE’VE NEVER BEEN HERE BEFORE. THINGS ARE OUT OF CONTROL. I HAVE NEVER SEEN A SITUATION LIKE IT.”
KEN CLARKE, FORMER UK FINANCE MINISTER, FEBRUARY 2017
Global Outlook – What is the ACC data trying to tell us Oil Markets – is the recent recovery for real, or is the OPEC-Russia output freeze likely to disappoint? 4 Key Scenarios for 2018 – Will they challenge “business as usual”? Demographics Drive Demand – Do ageing populations mean lower demand for “stuff”, how can producers profit from sustainability? Page 27
SAUDI ARABIA IS HEADING INTO A MAJOR TRANSITION FOLLOWING CORRUPTION PURGE
Page 28
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09/11/2017
US OIL PRODUCTION IS RISING, AND COMPANIES HAVE EXTRA VOLUME IN UNCOMPLETED WELLS Oil production per Permian rig has risen from 219b/d in December 2014 to 572b/d
Page 29
RISK MANAGEMENT MEANS DIFFERENT THINGS TO DIFFERENT PEOPLE IN THE OIL INDUSTRY
Page 30
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09/11/2017
THE MEDIAN OIL PRICE HAS BEEN $23/BBL SINCE 1861 Co-products produced with each ton of ethylene
Page 31
“THERE ISN’T ANYBODY WHO KNOWS WHAT IS GOING TO HAPPEN IN THE NEXT 12 MONTHS. WE’VE NEVER BEEN HERE BEFORE. THINGS ARE OUT OF CONTROL. I HAVE NEVER SEEN A SITUATION LIKE IT.”
KEN CLARKE, FORMER UK FINANCE MINISTER, FEBRUARY 2017
Global Outlook – What is the ACC data trying to tell us Oil Markets – is the recent recovery for real, or is the OPEC-Russia output freeze likely to disappoint? 4 Key Scenarios for 2018 – Will they challenge “business as usual”? Demographics Drive Demand – Do ageing populations mean lower demand for “stuff”, how can producers profit from sustainability? Page 32
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09/11/2017
4 KEY SCENARIOS THAT COULD CHALLENGE TODAY’S “BUSINESS AS USUAL” OUTLOOK RISING INTEREST RATES
CHINA SLOWDOWN
TRADE WARS & BREXIT
POLITICAL CHAOS
Page 33
Audience Challenge Question ANSWER THE QUESTION ON BLUE SCREEN IN ONE MOMENT
According to the Ph Report, which G7 country has the lowest central government debt as a percentage of GDP? • Japan • Italy • Germany • France • USA
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09/11/2017
CENTRAL GOVERNMENT DEBT AS % OF GDP HAS RISEN TO 94% - FROM 60% IN 2007
Page 35
QUANTITATIVE EASING WAS SUPPOSED TO BE A SHORT-TERM BOOST TO THE ECONOMY
Page 36
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09/11/2017
QE HAS LED TO A “SUGAR-RUSH” OF MEGA-DEALS – MANY HAVE NO INDUSTRIAL LOGIC
Page 37
“WORLD FACES WAVE OF EPIC DEBT DEFAULTS”
WILLIAM WHITE, FORMER CHIEF ECONOMIST, BANK FOR INTERNATIONAL SETTLEMENTS
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09/11/2017
CHINA SLOWDOWN
Page 39
CHINA HAS BEEN THE MAIN DRIVER FOR THE GLOBAL INDUSTRY SINCE WTO ENTRY IN 2001
Page 40
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GLOBAL AUTO SALES WOULD HAVE SEEN MINIMAL GROWTH WITHOUT CHINA The ‘top 7’ are 80% of total world demand
Page 41
OCTOBER’S CONGRESS SAW PRESIDENT XI ABANDON THE “GROWTH AT ANY COST” POLICY
Page 42
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TRADE WARS AND A HARD BREXIT
Page 43
PROTECTIONISM IS RISING AROUND THE WORLD “When the middle class are anxious about their economic realities in their future, it’s easy to get trapped in demagoguery and protectionism.”
SOURCE: GLOBAL TRADE ALERT
JUSTIN TRUDEAU, CANADIAN PREMIER
Page 44
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09/11/2017
GLOBAL SUPPLY CHAINS AT RISK AS TRADE WARS BEGIN “It does the American economy no long-term good to only keep the big box factories where we are now assembling ‘American’ products that are composed primarily of foreign components,” he said. “We need to manufacture those components in a robust domestic supply chain that will spur job and wage growth.”
PETER NAVARRO, US TRADE COUNCIL HEAD, 31 JANUARY 2017
Page 45
EUROPEAN SUPPLY CHAINS AT RISK AS BREXIT BEGINS
Page 46
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09/11/2017
Audience Challenge Question ANSWER THE QUESTION ON BLUE SCREEN IN ONE MOMENT
How do you feel about the future of the country you reside in right now? • We are headed in the right direction • We are neither headed in the right nor wrong direction • We are headed in the wrong direction • I do not have an opinion
POLITICAL CHAOS
Page 48
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09/11/2017
ASIA IS THREATENED BY NORTH KOREA’S NUCLEAR AMBITIONS
Page 49
THE UK HAS NO CLEAR PLAN FOR A POST-BREXIT WORLD
THE NEW YORKER
Page 50
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09/11/2017
FINANCIAL MARKETS ARE STILL FAILING TO TAKE ACCOUNT OF POLITICAL RISK
Page 51
“THERE ISN’T ANYBODY WHO KNOWS WHAT IS GOING TO HAPPEN IN THE NEXT 12 MONTHS. WE’VE NEVER BEEN HERE BEFORE. THINGS ARE OUT OF CONTROL. I HAVE NEVER SEEN A SITUATION LIKE IT.”
KEN CLARKE, FORMER UK FINANCE MINISTER, FEBRUARY 2017
Global Outlook – What is the ACC data trying to tell us Oil Markets – is the recent recovery for real, or is the OPEC-Russia output freeze likely to disappoint? 4 Key Scenarios for 2018 – Will they challenge “business as usual”? Demographics Drive Demand – Do ageing populations mean lower demand for “stuff”, how can producers profit from sustainability? Page 52
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09/11/2017
THE NUMBER OF US HOUSEHOLDS IN THE LOWER-SPENDING 55+ COHORT HAS ALREADY RISEN FROM 36m TO 56m
Page 53
MOST PLASTIC EVER PRODUCED IS STILL WITH US
DATA: MILLION TONNES
SOURCE: UNIVERSITIES OF CALIFORNIA, GEORGIA Page 54
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09/11/2017
SUSTAINABILITY IS REPLACING GLOBALISATION AS A KEY DRIVER FOR BUSINESS
Page 55
FUTURE CHEMICAL INDUSTRY GROWTH WILL BE DRIVEN BY SERVICES MOBILITY The sharing economy
SHELTER Renewables and conservation SUSTAINABILITY
HEALTH Digital healthcare
WATER Clean water and sanitation
AFFORDABILITY
FOOD Intelligent and reusable packaging
Page 56
SOURCE: THE pH REPORT
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09/11/2017
SIX KEY QUESTIONS FOR TODAY HOW DO WE ENSURE THAT OUR BUSINESS WILL SURVIVE AND PROSPER? MANAGING RISKS How will our P&L be impacted by a sustained period of low global GDP growth? How might trade wars and China’s slowdown impact key customers/supply chains? What is our contingency plan for a return to major oil/interest rate volatility? INVESTING TO BUILD THE BUSINESS How will we compete profitably as sustainability rises up the agenda? Can we create new service-led offerings to meet emerging market needs? Can we gain first-mover advantage whilst others hope for “business as usual”?
Page 57
Disclaimer Strictly Private & Confidential This Research Note has been prepared by IeC for general circulation at the ACS webinar on 9 November 2017. The information contained in this Research Note may be retained. It has not been prepared for the benefit of any particular company or client and may not be relied upon by any company or client or other third party. IeC do not give investment advice and are not regulated under the UK Financial Services Act. If, notwithstanding the foregoing, this Research Note is relied upon by any person, IeC does not accept, and disclaims, all liability for loss and damage suffered as a result. © International eChem 2017. All rights reserved
Page 58
CREATIVE ENERGY FOR IMPORTANT ISSUES
29
09/11/2017
“Chemistry and the Economy: 2018 Outlook”
William Carroll
Paul Hodges
Adjunct Professor of Chemistry, Indiana University and Founder, Carroll Applied Science
Chairman, International eChem
Slides available now! Recordings are an exclusive ACS member benefit.
www.acs.org/acswebinars Contact ACS Webinars ® at
[email protected] 59
View Past ACS Webinars and Blogs with Paul Hodges!
Chemistry & the Economy Series
bit.ly/chemandecon
60
30
09/11/2017
Upcoming ACS Webinars www.acs.org/acswebinars
Thursday, November 16, 2017
Fighting Sickle Cell Disease with Gene Correction Technology Mark DeWitt, Project Scientist, Innovative Genomics Institute, UC Berkeley Alyson Weidmann, Managing Editor for ACS Chemical Biology, ACS Chemical Neuroscience, and Biochemistry, American Chemical Society
Thursday, November 30, 2017
Treating Lupus: SLE Pathogenesis and Targeted Therapies Laurence Menard, Senior Research Investigator, Bristol-Myers Squibb Mary Struthers, Director Immunoscience, Bristol-Myers Squibb
Contact ACS Webinars ® at
[email protected] 61
“Chemistry and the Economy: 2018 Outlook”
William Carroll
Paul Hodges
Adjunct Professor of Chemistry, Indiana University and Founder, Carroll Applied Science
Chairman, International eChem
Slides available now! Recordings are an exclusive ACS member benefit.
www.acs.org/acswebinars Contact ACS Webinars ® at
[email protected] 62
31
09/11/2017
How has ACS Webinars ® benefited you?
“Most useful presentation and discussion! I am very impressed how ACS Webinars consistently touch upon numerous globally critical topics well beyond the direct scope of chemistry.”
http://bit.ly/ACSchemeconMidyear
Walter V. Cicha, Ph.D. Industrial Technology Advisor IRAP Pacific – NRC Canada
Be a featured fan on an upcoming webinar! Write to us @
[email protected] 63
youtube.com/acswebinars
Search for “acswebinars” and connect! 64
32
09/11/2017
Benefits of ACS Membership Chemical & Engineering News (C&EN) The preeminent weekly news source.
NEW! Free Access to ACS Presentations on Demand® ACS Member only access to over 1,000 presentation recordings from recent ACS meetings and select events.
NEW! ACS Career Navigator Your source for leadership development, professional education, career services, and much more.
http://bit.ly/benefitsACS
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09/11/2017
Upcoming ACS Webinars www.acs.org/acswebinars
Thursday, November 16, 2017
Fighting Sickle Cell Disease with Gene Correction Technology Mark DeWitt, Project Scientist, Innovative Genomics Institute, UC Berkeley Alyson Weidmann, Managing Editor for ACS Chemical Biology, ACS Chemical Neuroscience, and Biochemistry, American Chemical Society
Thursday, November 30, 2017
Treating Lupus: SLE Pathogenesis and Targeted Therapies Laurence Menard, Senior Research Investigator, Bristol-Myers Squibb Mary Struthers, Director Immunoscience, Bristol-Myers Squibb
Contact ACS Webinars ® at
[email protected] 67
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