The global economic situation is complex, and the petrochemical industry chain is inevitably affected.
On the other hand, as a bulk product, the petrochemical industry often exhibits cyclical trends. Therefore, better coping with market fluctuations and finding more stable value chains have become the direction of transformation for many upstream chemical enterprises.
Huntsman Group, a global specialty chemical enterprise, has three major business units: polyurethane, functional products, and advanced materials, and has been deeply rooted in the Chinese market for many years. Recently, during an interview with the Daily Economic News (NBD) reporter at the 2024 China International Petrochemical Conference, Pan Lumin, President of Huntsman Polyurethane Asia Pacific, analyzed the current industry development trends, changes in end consumer demand, and Huntsman's strategic transformation path to the reporter.
NBD: The global economy is facing uncertainty challenges, and the overall operating rate of the chemical industry is relatively weak in 2024. What do you think about the current development trend and changes in the industry?
Pan Limin: China's competitive speed is about three times the world average speed. Throughout the entire lifecycle of a product from its launch, Chinese products iterate and update at a very fast pace. Under such rapid iteration, the competition in the chemical industry is increasingly fierce. I have two thoughts on how to maintain my competitiveness in the competition of "involution".
Firstly, as an upstream producer and supplier, we need to consider how to utilize our more efficient production capacity to reduce production and manufacturing costs, and achieve cost reduction and efficiency improvement;
Secondly, increasing our layout downstream of the industrial chain, from upstream to downstream of the industrial chain, is also one of our paths. How to create more value and find the end value chain when laying out products downstream is also a new path for development.
NBD: Does Huntsman currently focus on several areas where upstream companies are expanding downstream?
Pan Limin: The petrochemical industry is a relatively cyclical industry. When developing in a cyclical manner, the company's performance is good, but once it enters a downturn, the overall performance will also decline. As we lay out the industrial chain from upstream to downstream, the overall volatility of enterprise profits is relatively small, and we can achieve relatively balanced and sustainable returns.
In recent years, Huntsman has comprehensively linked the industrial chain, committed to the reconstruction of the chemical industry's industrial chain, and promoted the deep integration of the industrial chain innovation chain. Taking Huntsman Polyurethane Business Unit as an example, we have launched four sustainable innovative solutions for polyurethane based on circular economy, exploring sustainable innovation in four major fields: green textiles, food preservation, energy-efficient buildings, and low-carbon travel.
NBD: Some of the world's major consumer markets have faced certain economic pressures in the past two years, and consumers are also paying more attention to cost-effectiveness. As raw materials for many consumer goods, chemical products, from the perspective of Huntsman's focus on the polyurethane industry, what are the characteristics of development in these two years?
Pan Limin: In the current overall economic pressure environment, consumers are increasingly focusing on the "quality price ratio". Chemical products provide the most basic raw materials for consumers' clothing, food, housing, and transportation. Taking "clothing" as an example, nowadays people are paying more and more attention to health, and the strong demand for outdoor clothing has given rise to the explosion of many outdoor clothing brands. We have found that in recent years, the demand for fabrics such as spandex in popular sportswear among consumers has grown rapidly. However, from a trend perspective, compared to countries and regions such as Europe, America, and Japan, the current application proportion of spandex in China's clothing industry is still not high. It is expected that the industry's demand for spandex and other fabrics will further increase in the future.
So although there are consumer differentiation and other situations in the current consumer market, the more at this time, the more consumers' demands for quality continue to increase. Based on such consumer demands, we also see more opportunities. Secondly, how to use innovation to drive sustainable development and achieve quality and efficiency improvement throughout the entire ecosystem and value chain of products is also a major trend for the future.
NBD: As a global enterprise, Huntsman entered China in the 1980s and has been deeply rooted in the Chinese market for many years. Currently, Chinese companies are also "going global". From the perspective of a global enterprise, how do we view the current situation of Chinese companies "going global"?
Pan Limin: Indeed, it has become a trend for Chinese companies to go global. Huntsman's clients cover fields such as transportation, home living, and energy. For our automotive customers, when foreign car brands entered China in the past, we would follow these European and American car brands to reach the Chinese market. Nowadays, with the strong development of new energy vehicles in China, we will follow many domestic new energy brands to expand our market overseas. Based on the advantages of our globalized enterprise, we can also provide some overseas market connections and global experience sharing for Chinese enterprises to go global.
In addition, in terms of the chemical market, China currently holds a world leading position in the segmented chemical products market such as synthetic polyurethane. Chinese chemical enterprises are also going global and will play a more important role in the global chemical industry. Huntsman looks forward to collaborating with more Chinese companies to continue driving industry change, guided by innovation and sustainable development, and creating greater value for global customers.