Covid-19 Impact on Global Chemical Industry – Initial Analysis
25 March 2020
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.