The changes brought about by digitalization may reshape part (if not most) of the value chain and end market of chemical products producer services, which in turn may lead to a change in demand patterns.
Take the automobile value chain as an example. Digital technology is obviously behind the rapid development of autopilot, but its impact on chemical manufacturers may not be immediately apparent. An unexpected impact on the demand for chemicals comes from the promise of automatic driving vehicles to improve traffic safety. With fewer accidents, the demand for coatings is likely to drop significantly, which will have a significant impact on coating manufacturers and chemical companies that produce coating ingredients. If the sharing of autopilot cars takes the place of personal car ownership and reduces the demand for new cars, the demand for chemical products will be further and more widely affected in one of the main markets of the industry.
The digital development of agriculture, such as precision agriculture, may also affect the demand for chemicals. Companies sell equipment and services to apply for crop protection chemicals and crop nutrition combined with analysis, navigation, satellite images, computer vision, machine learning to develop a method that allows segments of pesticides and fertilizers to be used in fields as small as a square meter or even individual plants. If their efforts are successful, the demand for pesticides is likely to decrease significantly.
The migration of e-commerce to online platform may also touch the demand for chemical products. For example, more and more people buy groceries through the Internet platform, and consumers make the purchase decision without seeing the real goods – which may have an impact on packaging, which is the largest single end market in the petrochemical and plastic industries. As the appearance and feel of packaging will become less important to form a purchase decision, this can prompt changes in the packaging industry. Although the importance of decorative packaging will decline, more practical packaging design will become more important, such as loading more packaging into transport trucks, or including a cooling mechanism to prevent damage during transportation. Similarly, this trend may affect a large number of chemical companies that sell their products into the packaging value chain, some of which may lose business, while others may gain new opportunities.
3-D printing (also known as additive manufacturing) is another digital field that brings opportunities for the demand of chemical products. The market for polymers and chemicals for additive manufacturing is growing at an annual rate of 30% and is expected to grow from US $700 million in 2015 to US $2.5 billion in 2020. The market is likely to move towards polymers and chemicals tailored for different additive manufacturing systems, which will bring innovation and business opportunities to companies that manufacture photopolymers, high-performance thermoplastics and other chemicals used in these processes.
