After a prolonged nationwide lockdown to contain the spread of novel coronavirus, Chinese chemical sector is preparing for a comeback. This can be sensed from the pace with which Chinese players have resumed operations in their factories in March following widespread shutdowns that led to closure of several factories backed further tensed by extended supply chain disruptions.

Although the country seems to have controlled the virus transmission to a greater extent, the global economic slowdown is delivering it a second blow. With no new positive cases for weeks, China seems to have triumphed in controlling the transmission when rest of the world is struggling to control the community spread by imposing lockdowns. However, the undue halt in operations and weak demand has put a deeper dent to China’s Chemical industry which seems to

China’s Industrial output and Manufacturing Index

According to a latest report issued by the National Bureau of Statistics of China, encompassing all the sectors, China’s industrial output dropped by 14% in the first two months of 2020, compared to the last fiscal year, and profits slumped by 39%. Chemical manufacturing was among the hardest-hit sectors, with output declining by 21% and profits by 66%. Although operations started resuming appreciably in the month of March, industrialist believe that lack of international orders has forced the players to implement output cuts. Production activities in the world’s second biggest economy which can be measured in terms of the China’s manufacturing purchasing managers' index (PMI) for March rose to 52.0 - the highest since September 2017 - from a record low of 35.7 in February 2020. It is anticipated that since most of China’s end-products are meant for exports, their demand would further dissipate now that the global economy is already slipping into a recession. As per the recent interview by an official from Zhongxiang, a phosphorus chemical industry, that manufacturers are facing raw material and logistics constraints in addition to difficulty implementing environmental protection rules.

Global Demand Outlook

The lockdowns and quarantine measures in Western part of the globe have led to drop in demand for a wide range of Chinese-made goods, including phones, toys, and clothes. This has already led to bankruptcies and shutdowns of export-oriented plants in the coastal parts of China. Till now, China leads the world in chemical sales with a greater dependency of major economies over its manufacturing sector. However, analysts believe that the current situation can be a game-changer as worsening overseas situation is another blow to country’s total chemical sales in this fiscal forcing world’s industrialists to re-think upon concentrated supply-chain issues. While others anticipate that there is a strong possibility of a quick V-shaped recovery in the coming months indicating a strong rebound in China’s growth from the second quarter of 2020.

Falling Exports, A Major Threat

For PE and PP, huge inventory pileups have created a pressure over petrochemical players. Increased inventories at ports for MEG, styrene, benzene, xylene, and many others pose a major threat to China’s chemical and petrochemical growth. Slump in crude oil prices in has given hope to the country’s manufacturing sector which is gazing at better margins as production activities improve especially among naphtha-based polyolefin and ethylene glycol producers. Methanol, benzene and PTA experience strong downfall in prices following the crude-crash.

Key Headlines
• Another Utah refinery enters into production of ‘Tier 3’ fuel
• Whiting Petroleum falls as U.S. shale producers opt to close rigs
• Naphtha falls below LPG, feedstocks collapse in Europe
• Asia’s naphtha dips lowest since 2008
• OPEC to hold a conference on Monday, oil price collapse to be discussed

Get the Chemical and Petrochemical Industry News on Daily Basis, Weekly-Trend & Forecast and Monthly-Analyst Views
Subscribe Today!
News on WhatsApp/WeChat/Mail
First 15 days free news
WhatsApp No. +91-9914868686
For sales related query, dial +91-9958299626 or email at [email protected]
About ChemAnalyst

ChemAnalyst is ‘one stop’ online portal that offers comprehensive market intelligence data and in-depth analysis on the Indian chemical and petrochemical industry. Our aim is to provide competitive advantage to the industry stakeholders by offering ‘cutting edge’ information and analysis that help our customers leverage on the emerging opportunities in their businesses.

ChemAnalyst’s team of 100+ analysts are engaged in tracking Chemical Prices daily, production capacity, demand and supply outlook, manufacturing plant locations, foreign trade data and news/deals for more than 400 major chemicals produced in India. ChemAnalyst’s Interactive subscription platform provides the most comprehensive data and analysis in your industry to help you decide the future.

ChemAnalyst is promoted by TechSci Research (TSR). TSR is an award winning research based management consulting firm providing market research and advisory solutions to the customers worldwide, spanning a range of industries including Chemicals & Material, Automotive, Consumer & Retail, ICT, Energy & Power, Aerospace & Defense, Water and Waste Management, BFSI and more.

For more information, please visit us at

www.chemanalyst.com

Source: ChemAnalyst