In the chemical and industrial sector, staying ahead of pricing trends is crucial for businesses to navigate challenges and seize opportunities. As we step into 2024, the chemical sector is poised for significant developments that will shape pricing dynamics. From global market shifts to technological advancements and regulatory changes, stakeholders must be vigilant to make informed decisions. There are several key factors influencing chemical pricing in 2024, providing insights that industry players need to anticipate and adapt to the dynamic pricing environment.
Energy Transition will Drive Manufacturing Investment
Investments in chemical manufacturing in 2024 will be influenced by advancements in technology. Companies that adopt or invest in innovative technologies, such as automation, artificial intelligence and sustainable manufacturing processes, will likely see increased interest.
Demand for chemicals was softer than expected in 2023, however this is expected to reverse course in 2024 in part due to demand for chemicals and materials needed to support the “energy transition” economy. Global investment in energy in 2023 was US $2.8T with more than 60% of this going to clean tech, renewables, EV and battery storage. Manufacturing processes are increasingly reliant on lightweight, durable, engineered chemical and industrial products. According to IEA Net Zero by 2050, the petro-chemical industry will support more than 75% of technologies needed to meet energy transition goals. Targeted pricing strategies with speed and agility will be required to successfully navigate this growing sector of the economy.
Geopolitical Risk and Shifts in Demand will Drive Reshoring
As geopolitical uncertainties cast shadows over international trade and demand dynamics undergo transformative shifts, businesses are reevaluating the very foundation of their supply chain strategies. This interplay is becoming a catalyst for the reshoring of critical industrial supply chains. From national security considerations to the imperative of supply chain resilience, businesses are forced to consider their global production footprint.
Demand for U.S.-sourced inputs is rising given the inability to purchase from Russia and increasing concerns around sole-sourcing from China and Singapore. Regulations and incentives from CHIPS Act and similar government policies, in addition to demand for AI hardware, increased demand in the motor vehicle and semiconductor manufacturing sectors. Uncertainty around Russia/Ukraine and now distribution via established shipping channels in the
Red Sea, Africa and the Middle East region is likely to drive up costs, or at a minimum increase volatility around, oil and many related commodity and specialty products. Recession and deindustrialization of Europe is leading chemical and industrial companies to reexamine and shift their portfolios in the coming year. Volatility is again the watch word for 2024, perhaps more so than what was seen in 2023. Visibility into margin compression and the ability to proactively avoid pitfalls will be critical to success in 2024.
Soft Skills in an Increasingly AI-Driven World
In the era of rapid technological advancement and the ubiquitous presence of Artificial Intelligence (AI), the spotlight is increasingly turning toward the invaluable human attributes that transcend algorithms and code. From emotional intelligence to creativity, adaptability and interpersonal communication, these skills are reemerging as keys to professional success. As machines become more proficient at handling routine tasks, the spotlight is on the role people will play in an AI-driven world.
In 2024, companies will start to come to terms with the use of generative AI and related technologies that are increasing productivity, however they are increasingly separating employees from the street-level learning and feedback they are tasked with managing. The use of AI in pricing optimization, management, and CPQ will require highly experienced oversight and even more interpersonal and problem-solving. The most successful managers in 2024 will cultivate the ability to formulate and interrogate strategy and effectively communicate up and down the organization for alignment and buy-in around execution of strategy.
In the intersection of the energy transition, reshoring initiatives fueled by geopolitical shifts, and the ever-growing prominence of soft skills in an AI-driven landscape, a transformative narrative for the future of manufacturing and industry unfolds. Together, these trends encapsulate a holistic approach to shaping the future of manufacturing. Success lies in the fusion of technological innovation, geopolitical foresight and the cultivation of uniquely human attributes.
As industries evolve, the integration of these elements will not only drive economic growth but also lay the foundation for a more resilient, equitable and empathetic industrial paradigm, where innovation and compassion go hand in hand to shape a future that is both sustainable and uniquely human.
Predicting the future is an inherently challenging task, as it requires navigating through the uncertainties of evolving technologies, unforeseen geopolitical events and the intricate interplay of various dynamic factors. Volatility is one constant element of any prediction for 2024. It’s anyone’s guess how this year plays out, but the themes discussed here are sure to be significant elements of the chemical and industrial strategy going forward.
