When asked about the weak market demand for polyolefins, David Leggett, Automotive Analyst at GlobalData, comments: "The global auto industry is facing a pandemic-led sales decline of 16-17% this year. That translates to much lower demand for materials such as polyolefins in automotive manufacturing. Although the global vehicle market is in recovery phase, the outlook for sales remains uncertain while the pandemic and its adverse economic impacts, persists. The underlying level of demand is not forecast to recover to pre-pandemic levels until 2023."
While some industries are struggling, meanwhile, the strong gains of polyolefin use within FMCG and packaging may be due to consumer behaviour. Carmen Bryan, Consumer Analyst at GlobalData, notes: "The COVID-19 pandemic has led many consumers to report being more cautious when buying food and FMCG products. Many have reverted to more traditional packaging materials such as PET, despite ongoing environmental concerns, as these are perceived as safer and more hygienic. In fact, 53% of respondents to GlobalData’s survey in June noted that they are concerned about the safety of product packaging amid the pandemic - a concern that has remained relatively stable over the past few months, standing at 50% as of the October survey. This suggests the emergence of a new trend as single-use plastics that securely seal food and beverages return to popularity."
John Paul Somavarapu, Oil and Gas Analyst at GlobalData, comments: “With the gradual appreciation of economic activity, the demand for polyethylene and polypropylene is likely to improve towards the end of 2020 and maintain the upward momentum from 2021.
“The pandemic has impacted the demand for polyethylene and polypropylene in the shorter term. Consequently, polyolefin producers have either lowered operating rates, halted operations or declared force majeure to withstand the challenging economic conditions. Petrochemical companies are closely monitoring economic developments and would undertake a strategic review of the progress and development of key projects.”
In response to the economic impact of COVID-19 on sectors worldwide, major petrochemical companies have preferred deferring final investment decisions (FIDs) or delaying project execution wherever possible. For instance, FIDs of PT Chandra Asri Perkasa Cilegon Polyolefin projects have been postponed from 2021 to 2022, while the PTT Global Chemical Belmont County project has been postponed to 1Q21 from the initially planned 2020.
Somavarapu notes: “Although prospects for additional FIDs in the sector look challenging, companies look to focus on key projects and ensure the completion of these projects on priority.”
Polyolefin capacity additions are largely concentrated in Asia - primarily China and India – that target self-sufficiency to meet the existing and growing demand in their respective countries. Other majors such as Russia, Iran and the US also have a significant capacity addition.
Read the article online at: https://www.hydrocarbonengineering.com/petrochemicals/11112020/globaldata-demand-from-packaging-and-healthcare-segments-to-help-polyolefins-market-stay-afloat-amid-covid-19/
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