21 May 2020 | 12:46 UTC — New York

Europe's petrochemical markets during COVID-19

Highlights

The May issue of the EU Official Economic Forecast showed 7.5% contraction of the EU economy in 2020 in aftershock of the pandemic, with a growth of around 6% in 2021.

Survey by CECE (Committee for European Construction Equipment) in March showed 32% of significant reduction in production and manufacturing and around 30% factory closures.

European polyvinyl chloride (PVC) industry has been hurt, with plant rates kept reduced and awaiting construction activities to pick up during the coming months.

Phthalatic anhydride (PA) plants in Europe keep running at lower rates, due to lack of demand in plasticizers used in the construction materials.

New construction projects may come under threat in the pandemic aftermath, due to cash flow and investment uncertainties.

PVC industry discusses government backed infrastructure projects to help recovery in the European construction, as one way of economic stimulus.

New York — An increase in economic activity in Europe amid the recent easing of lockdowns across the continent should boost demand for petrochemical raw materials, chemicals and ready-made products for the construction sector, among others.

However, the overall economic slowdown as a result of the coronavirus pandemic meant markets were expecting a long road to full recovery.

Below are latest facts from petchem markets:

Economy, infrastructure:

Demand:

  • Demand for EPS in Europe is expected to drop around 10% this year from 2019 levels due to the coronavirus pandemic affecting demand from building and construction applications.
  • Weak demand from construction has also affected the expandable polystyrene market and the recovery this year will be slow.
  • Demand for polypropylene from key construction sector remained depressed in May as many construction projects were brought to a standstill across the region amid the coronavirus pandemic.
  • The fall in demand from the construction industry has added pressure to European PP copolymer prices. PP Copol FD NWE spot prices fell by 7% from the beginning of May.
  • Demand in PVC window profiles keep depressed, while pipe consumption slowly resumes in May.
  • Summer vacation period coming under review after the prolonged COVID-19 lockdowns gives hope for additional PVC demand.

Prices:

  • European PVC spot prices kept stable, keeping at 11-year lows, and awaiting demand improvements.
  • CFR Turkey PVC prices rose by $40/mt on the week, higher import offers expected going into June.
  • HDPE injection fell by around 18% since late March, while HDPE blow molding went down by 14%, both used in construction applications.
  • Solvent naphtha prices hit 11-year low, home renovation and construction works expected to provide some relief.
  • European PA flake prices keep at 16-year lows, with demand both from construction and automotive slow, despite easing of lockdowns.