Insights

2015 Chemicals M&A Outlook

2015 Chemicals M&A Outlook

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Chemicals

The chemicals sector faces a number of challenges in the South African market. Through collaboration we are committed to creating sustainable solutions for the industry. Deloitte offers a wide range of expertise and solutions which can be specifically tailored to meet our client’s individual needs.

Chemical

Deloitte monitors a range of trends and issues within the chemicals sub-sector, ensuring that we stay abreast with what excites and concerns our clients most, and can optimally assist them to thrive in the midst of the sector’s toughest challenges.

Some of the trends we monitor in this sector include:

o       Onerous regulatory requirements: Particular in the health / safety and environmental arena, and developing this sector in a green economy. Chemical manufacturers need to be prepared and understand the impact of such regulations on strategy, risk management, and enterprise applications.

o       Agriculture, water and mining in Africa: All becoming increasingly topical when looking to expand into the rest of the continent. Chemical manufacturers will need to have a good understanding of these in order to successfully expand. Particularly relevant are the constraints in South African mining at the moment as this has a direct impact.

o       Transport infrastructure: Majority of the major chemical companies would prefer to transport chemicals through government owned transport utilities however, there are challenges with road / rail infrastructure including safety issues.

o       Volatile input costs: Volatile input costs are a major challenge for chemical producers even as they focus on improving profits. With feedstock positioning from emerging markets growing as a strategic option, companies are linking commodity prices with selling prices to manage risks and align strategy.

o       Innovation: The chemical industry is investing in R&D in the fast-growing emerging markets, leading to reduced research intensity in developed markets. Additionally, leading chemical companies are involved in open innovation for new ideas and technologies.
 

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Key contacts

Patrick Earlam

Manufacturing Chemicals Leader