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Gradually returning demand offers glimmer of hope in polymer markets

by Manolya Tufan - mtufan@chemorbis.com
  • 01/06/2020 (04:48)
In accordance with the normalization plans, activities in the manufacturing and services sectors across major markets are expected to revive after a long period of inactivity. There are early signs of post-lockdown demand recovery. Meanwhile, transitioning to the new normal requires the continuity of hygiene measures, which will keep demand in certain segments firm.

CHINA

Rigid plastics see better demand from automotive and construction sectors

Demand for PP and PE products started to grow as early as February in China in line with the increasing need for medical-use polymers. New production lines were constructed to meet growing demand for medical masks due to the virus outbreak. This, in turn, led to tight supplies of certain homo-PP grades and pushed prices of PP non-woven and fibre higher.

Apart from boosted demand for medical applications, consumption of single-use items and food packaging products also increased during the battle with the coronavirus outbreak.

With China being the first country emerging from a nationwide lockdown, demand has also improved in the construction and automotive industries. Increasing economic activity and higher production rates at downstream factories supported buying sentiment. PVC, HDPE pipe and injection prices were pushed higher driven by emerging demand in these sectors following months of confinement measures.

SOUTHEAST ASIA

Hopes for demand recovery after lockdowns

The recovery expectations after lifting of lockdown measures dominated the sentiment in Southeast Asian markets. Rising inquiries amid the firming in China and the gradual resumption of manufacturing activities are supporting this view. A better demand has been observed in Vietnam and Thailand.

Vietnam became the first Southeast Asian country to ease restrictions from late April. In Vietnam, demand for jumbo bags has risen recently in response to the need for storing excess stocks. A converter said, “Demand for jumbo bags is good. Many countries are still in lockdown, avoiding smooth sales. Therefore, jumbo bags are used to store unsold products.”

Malaysian players have also noticed better demand for food packaging applications, while non-woven shines out as the firmest product among other PP grades due to high need of face masks for health workers.

EUROPE

Demand outlook for essential items remains promising

Virus-induced panic buying created a demand boom for food-grade packaging and hygiene products during March-April in Europe. Demand has waned off to some extent in these segments as moves towards normalization are initiated across the world, while demand outlook for food, hygiene and pharmaceutical products remains promising.

Certain grades of LDPE going into the flexible packaging enjoyed strong demand.

Converters were running their HDPE b/m lines at full rates as this grade is used to make flacons of hand sanitizer gels. PET is also used in the food packaging, cosmetic bottles and face shields.

There was a growing need for face masks, medical bed sheets and protective surgical gowns to combat the spread of the COVID-19 pandemic, supporting PP non-woven and fibre grades.

“Our sales have been satisfactory for spunbond and meltblown PP grades,” a market participant reported.

Transparent partitions, which are made of PMMA, PC, PVC and GPPS, started being used in the supermarkets and offices as part of social distancing measures. Office room dividers create a safer working environment.

Some players reported better GPPS demand as it is used to produce test tubes. Test tubes are made of a variety of products including PS, PP, PE and PVC. PVC is also used in blood and IV bags.

The high season for agriculture is set to kick off as of June, which is expected to support LDPE prices going forward. With regional supplies being tighter for this grade, some buyers secured extra stocks ahead of the potential hikes in June.

TURKEY

Reopenings set to trigger disposable demand

Similar to the rest of the world, demand for medical-use polymers has been performing well in Turkey as well. Non-woven witnessed healthy demand as it is used to make personal protective equipment including masks and gowns. Demand for food packaging and hygiene products were also boosted amid stockpiling activities seen amid lockdown measures.

PET bottle buyers affirmed, “Demand for flacons of hygienic products remains healthy both in the local and export markets, which counterbalanced the demand loss from the beverage industry to some extent.”

As barbershops, beauty salons and hairdressers have resumed activities as part of the normalization schedule, demand for disposable bags and other disinfection products has increased. The shops will use anti-bacterial wipes instead of cloth towels.

Moreover, Turkey is set to end lockdown restrictions as of June 1, allowing bars, cafes and restaurants to resume activities. This is expected to lead to a pickup in demand for disposables as well as beverages.

What the big picture tells?

On the other side of the coin, the good performance in certain sectors has yet to create a major impact on the overall demand picture. As more countries have emerged from the virus-led lockdowns, overall demand in the textile and automotive industries has not staged a visible recovery due to the demand destruction. Activities in the carpet industry, one of the hardest-hit by the virus, ground to a halt along with the traditional sluggishness during Ramadan.

Consumption of non-essential items is far away from being back to pre-virus levels, as a compounder put it.

Although re-opening of shops in the main export markets including Europe and the US sparked hopes for a revival in the textile sector, a swift return to normal in the automotive sector is not deemed likely amid ongoing economic challenges.
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