BEYOND CHINA

CHEMICAL AND SPECIALTY CHEMICAL COMPANIES ARE REVISING THEIR SOURCING STRATEGIES

- P.B. JAYAKUMAR

It was a month ago. In a conversation on phone with a senior manager of a medium-scale chemical company on people returning from China and being tested at the airports for coronavirus, he said in hushed tones: I am one of them who returned from Wuhan two weeks ago. Now I am in isolation and do not have to go to office for another two-three days. He explained that since most of the company's raw materials are long-term contracts with manufacturers in Hubei province, the management had sent him to renegotiate contracts and explore other options.

Then life was normal there. There was no other option and I had to go, he reasoned.

But, one thing is abundantly clear. Once the Covid-19 virus storm passes, the Indian chemical and specialty chemical manufacturers could rethink their sourcing strategy. That's because till the crisis struck, these companies were relying heavily on two countries - China and the US - for sourcing raw materials. Continuing with the same strategy will push their business into the doldrums, say experts.

Over the past two months, chemical manufacturers have been working hard to change their source from China to other destinations. Wuhan, the epicentre of corona virus pandemic, happens to be a global hub for chemical production. China, in fact, dominated global chemical supply for almost two decades. But now, India's trade data shows a shift in imports.