Could you share the latest developments at Integra Petrochemicals?

We have continued to integrate more closely with the QXTD manufacturing site in China, allowing more volume for export markets and supplying feedstock from the international markets.  QXTD have continued to upgrade their propylene chain, starting up a new PDH plant and scaling up MA, MMA, and MEK. We consolidated our distribution business, buying 50% of a European distributor. We are not a typical distributor, but believe it comes down to efficient supply chain management from manufacturer to customer. Handling the distribution allows us to have better control over inventory because we can directly handle the trucks and barges on one side and the production and shipping on the other. Leveraging our decades’ long experience and customer base, Integra’s distribution business is growing faster than anticipated.

How is your global strategy evolving?

One of our guiding principles is to be simultaneously global and local (glocal), which gives our clients a double advantage: A diversified portfolio and geographically optimum supplies from the cheapest markets, whether Trans-Atlantic, Trans-Pacific, Middle East, North or South European. Simultaneously, we have an intimate understanding of local markets so as to gain the best arbitrage. With our ear to the ground and feet on the road, we can serve both local customers and a diverse international clientele.

How is Singapore positioned in the context of the trend of supply chains regionalization?

As a major shipping hub, Singapore will benefit from this trend. What’s also in Singapore’s favour is that more manufacturers with production in Northeast Asia or the West feel the need to diversify their footprint. Singapore ticks a lot of boxes in terms of government support, education, language, connectivity, and being in the center of an ASEAN hub formed of populous countries like Indonesia, Malaysia, Thailand, Vietnam, and Cambodia. The short distance to these markets is a strong advantage for Singapore, and I suspect it will bring more investment to Singapore in 2024-2026.

How is the trading industry reacting to current global disruptions?

Confusion best describes the state of the market. Everyone is trying to make sense of the war in Ukraine, politics in America and the supply chain issues in China. The investment community is driven by sentiment, which is fluctuating. In the early months of 2022, many European manufacturers started ordering more and building inventories as prices increased, sending a false positive signal to the market. But then China continued to grapple with Covid, while in the US and elsewhere inflation has been going up. What’s baffling is that retail and restaurant revenues have grown, even though wage inflation is dragging. So, are people spending because the dollar is worth more today than it might be in a few months’ time, or is this a rebound from two years of online shopping and people just want to take their masks off and go to the shops? It is unclear.

The supply side is also messy, with different scenarios for the car industry and the construction industry beginning to split the market. Due to the shortage in chips, car production slowed down, lowering demand for steel, chemicals, and rubber. But when chip supply catches up, there will be a pent-up demand for new cars, so long as people can afford them. In the construction industry, projects that have been put on hold during the pandemic are resuming as Covid recedes, but these construction projects will have big financial overruns because the price for building materials has doubled or tripled in some cases and need to be ordered well in advance. In the short term, chemical companies supplying the construction industry will see growth, but the reality is that the construction industry is busy with projects approved before the pandemic and are buying ahead for whole projects rather than just in time deliveries, whereas the pipeline for new projects is quite empty. Financing for new projects is difficult and making the numbers add up is getting hard with inflation looming.

How is the growing focus on sustainability shaping the trading business?

Sustainability is still more topical in Europe than in Asia. Here they haven’t yet been faced with the consequences of changes to policy. The Singapore government is driving awareness on the matter, but many players are still not fully aware of how it concerns their businesses or their personal lives in the region.

At Integra, we did our first Together for Sustainability (TfS) audit in 2021, and we completed the International Sustainability Carbon Certification (ISCC), both audits helping us create a stepwise roadmap. As a trading company, we have an indirect role in the carbon value chain, but we can use our platform to (first) inform and (then) educate the market as part of our ESG strategy as well as reducing our direct emissions. We are investigating the best ways to ship by engaging with shipowners, understanding the emissions of voyages, and working with companies that share our values.

Do you have a final message?

Probably at this stage in the cycle it would be to ask everybody to watch their inventories, planning for the worst and hoping for the best!