The global polyolefins market is expected to decline in 2020, according to data and analytics company GlobalData. However, the weakened demand is partially offset by strong and increased demand from sectors such as packaging, FMCG, and healthcare.
GlobalData: Demand from packaging and healthcare to help PO market
While some industries are struggling, the strong gains of polyolefin use within FMCG and packaging may be due to consumer behaviour.
Carmen Bryan, Consumer Analyst at GlobalData, said: "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."
John Paul Somavarapu, Oil and Gas Analyst at GlobalData, added: “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.”
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 Q1 2021 from the initially planned 2020.
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.