What is Covid-19 virus adding?
In a previous promotion “What next for Polyester? What Is Changing in the Economy And Petrochemicals From 2019 Onwards?” we analysed the main dynamics and trends for the already complex polyester chain.
2020 year started with the unfortunate and unexpected Covid-19 outbreak. We analyse the impact so far on the polyester industry and what industry participants can expect in the coming months.
Depending on the local supply/demand balances, the dependency on and level of imports, domestic production availability and other factors, individual countries, regions and products could benefit in the short-term.
Lower global consumption and production of polyester has already brought consequences and new uncertainties, while other structural changes already underway are likely to be accelerated due to the effect of Covid-19.
The two main global trends observed in the polyester chain are:
- Increasing global overcapacity for PET resin and main raw materials (PX, MEG and PIA). This is a combined consequence of new capacities (China’s trend towards self-sufficiency and cheap shale gas as a disruptive technology in the US) and softening demand, in line with weakening global GDP. Low margins can be seen for all products in the chain. Some regions and producers are becoming more active exporters, despite increasing trade barriers.
- The effect of Sustainability as a megatrend on petrochemicals. Changes in refinery configurations, due to more electric vehicles and lower gasoline consumption, towards the conversion of more Crude Oil To Chemicals (COTC). Chemical and polymer attributes - such as being bio based, biodegradable, recyclable or with a low carbon footprint – are adapting to final product requirements and changing consumer behaviour in the light of increased recycling, the image of plastics, use of single use products and how preferences for packaging of drinking water and food will develop in the future.