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COVID-19 Impacts on the Chemical Manufacturing Industry

Updated: Mar 4, 2021

The Covid-19 pandemic has caused large scale disruptions in nearly every industry due to market and economy uncertainties. The global supply chain faced bottlenecks so severe that whole production runs were brought to a halt while industry professionals struggled to salvage the mess that was made of their businesses. While forecasts are never accurate, there was no way to predict the massive decrease in demand and downturn of the economy that was brought about by the coronavirus outbreak. The chemical industry, in particular, was faced with a unique set of challenges during the pandemic given that chemical manufacturing is an essential industry. In addition to being essential, chemical manufacturers are heavily sensitive to supply chain disruptions and could see a decrease in demand due to customers facing unprecedented financial insecurities.

Essential industry, but risk of infection

The most evident issue with chemical manufacturing during the pandemic is the fact that it cannot be done remotely. Essential workers involved in the manufacturing and delivery processes must come in everyday to continue production of vital products that are necessary goods to consumers. This puts the employees, their families, and anyone they come in contact with at risk of infection. While every precaution is being taken and personal protective equipment is being utilized, the risk is still there.

Disruptions in supply chain

Supply chain disruptions were felt in almost every industry. Firms in the chemical manufacturing industry often outsource their raw materials. Since outsourced materials have longer lead times and risks involved, they are already more volatile to bottlenecks and disruptions. Manufacturers may experience longer delivery times, out of stock items, and frustrated customers.

Fall in demand due to uncertainty

While chemical products are essential, the industry in general has seen a negative trend in demand in 2020. Downstream industries, such at the automotive industry, that are customers of the chemical industry have slowed their production runs. This along with more conservative financial practices caused by the pandemic has led to a decrease in demand for chemical products. While there is a predicted upward trend for 2021, these negative trends have widely impacted manufacturing processes.

Changing focus to IPAs for sanitizers

Although the Covid-19 pandemic has had several negative impacts on the industry, it did present an opportunity to produce more chemicals found in cleaning products that can be used to disinfect and kill the coronavirus. The need for bulk hand sanitizers for businesses such as retailers, schools, and restaurants has seen an increase in 2020. In response, manufacturers ramped up production of products like isopropyl alcohol to make hand sanitizers and disinfectant wipes for households and businesses to keep families, workers, and customers safe.

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