Coronavirus affecting EMEA petrochemicals markets

New York — Following are key facts about the unprecedented challenges and uncertainty faced by the European petrochemical industry due to the coronavirus pandemic and government restrictions on movement in an attempt to limit its spread.

As supply-chain concerns in Europe continue to rise, market players will be faced with the prospect of cutting rates regardless of margins. Talks of end product production closures are expected to feedback into feedstock petrochemicals in the coming months.

"Europe currently has the lowest cost of ethylene production in the world based on cracking naphtha feedstocks," senior manager for Petrochemical Analytics at S&P Global Platts, Rob Stier, said.

"However, these high margin are not expected to last much longer as buyers and sellers have to face reality in April and fix prices. Platts Analytics forecast much lower polymer prices starting in April as price transparency returns to the market after an illiquid and murky March."

Infrastructure:

**Resin producers switch production to supply strong demand segments, such as food and medical supplies, and away from rigid automotive and construction plastics.

**Petrochemical demand in Europe hit by automotive factory closures, sources said demand for products such as styrene-butadiene rubber, polypropylene, acrylonitrile-butadiene-styrene, and PVC will be hit.

**European chemical, plastics traders seek alternative trade as auto, construction demand slumps.

Trade flows:

**Acrylonitrile supply into India, Iran in May uncertain due to quarantine restrictions.

**Spreading coronavirus pandemic and European lockdowns are hitting downstream purified terephthalic acid demand, making the short-term outlook for the European paraxylene market more bearish.

**European February caustic soda stocks fall 16% on year as chlorine production falls, according to Eurochlor.

**European PVC producers slash run rates as coronavirus slashes demand.

Prices:

**European MTBE switches to discount to May gasoline on slow blending demand.

**Orthoxylene fell 2% on Monday to its lowest since January 2009.

**NWE paraxylene March CP fully settles down Eur145/mt.

**European caustic soda prices remain on an uptrend, with availability very tight because of the pandemic capping chlorine demand.

**Widening price gap in the recycled HDPE market as buyers double down on higher-quality material, while lower grades are hit by lower virgin pricing.

**Benzene market moves into a steeper contango into forward months as sentiment in the oil market turns more bullish.