Regional competition heats up, driven by commodity prices, policies, and supply chain concerns

March 06, 2024

Commodity prices: Historically, the relative cost of energy and feedstock has regularly impacted the regional competitiveness of chemical production for short periods. However, recent geopolitical events have altered this competitiveness for the foreseeable future; this has led some companies to rethink the viability of their assets.

Policies: New climate-related policies are also impacting regional competitiveness.In February 2023, Europe announced the Green Deal Industrial Plan to counter US subsidies and prevent an exodus of industrial activity from Europe.In addition, the Cross Border Adjustment Mechanism (CBAM) was adopted in May 2023 to help level the playing field between European Union and foreign producers by putting a carbon price on certain carbon-intensive products.

Supply chains：Onshoring, nearshoring, and friendshoring are gaining momentum. Supply chain disruptions became pervasive during the COVID-19 pandemic and were exacerbated by the Russia-Ukraine war.In addition, pressure to decarbonize is incentivizing the localization of supply chains. 

From:Deloitte