Covid-19 Impact on Global Chemical Industry – Initial Analysis

25 March 2020
Chemical Industry Trade Data

Trying to evaluate the impact of Corona virus or Covid-19 on the global chemical industry at this point of time when there is a shutdown in China and other countries is difficult. However, chemical makers both in China and Western countries report progress in their efforts to keep their businesses running in this tough situation. According to Export Genius market research report on global chemical industry, companies with business operations in China are getting their facilities going again, and those dependent on raw materials from China are crossing their fingers even as they reroute supply chains. How COVID-19 has affected chemical industry? Let’s have an initial analysis.

China Attempts to Recover

With China’s new confirmed COVID-19 cases now fewer than 10 a day outside the hotspot of Hubei Province, the country’s chemical industry is pushing to production. But the speed of production is poor due to spotty supplies of raw materials and weakening demand. According to China chemical industry news, most major petrochemical plants in the southeast province of Zhejiang had resumed production from Feb 19.

Major problems affecting manufacturers and logistics firms in chemical sector include:

                     ·       transportation blockages

                     ·       reduced demand

                     ·       worker shortages

The overall impact on China’s chemical sector will now mostly depend on how fast the coronavirus can be conquered. The last two weeks have had very limited impact on overall chemical and other production, as during this spring festival period, most companies stop production anyway. However, these factories would now gradually start production again, and if this does not happen within the next 1-2 months, the impact will be much more serious.

Italy’s Chemical Industry also Get Affected from Virus

Pharmaceutical chemical industry in Italy is likely to be affected by the coronavirus as new cases are on the rise. In fact, after China, Italy has become an epicenter of covid-19. According to the reports, there is no impact of coronavirus on chemical companies which are located outside the perimeter of the 11 cities presently under quarantine.

Some manufacturers of chemical products in Italy are concerned that transportation restrictions which are already interrupting raw material supply from China will impact access to materials from elsewhere, given the extent to which chemical manufacturers everywhere are dependent on starting materials from China.

European Countries Feel the Pain

European companies believe that coronavirus will have a negative impact on chemical industry. According to the reports, chemical companies in Europe will see a shortfall in earnings of first quarter of about $65 million.

The company has been able to keep its plants in China running but at reduced rates from where European countries import materials for producing chemical products. The logistics situation remains a true challenge. Finding enough truck drivers to haul material has been difficult.

The International Monetary Fund (IMF), after seeing current scenario has forecasted -5.6% growth in China, down 0.4% from predictions made in January.

Of course, one thing is also clear. In 2003, China accounted for less than 10% of the global chemical market while in 2018, the share was 36%. Thus, anything happening in China’s chemical industry will have a much bigger impact on worldwide customers and suppliers of Chinese producers of chemicals.

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