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Chemical industry profits in North America and Europe will fall 20% this year
Affected by the global pandemic, U.
S
.
credit rating agency Moody's said it expects the average profitability of the chemical industry in North America and Europe to decline by about one-fifth year-on-year in 2020, with the worst expected to occur in May and June.
According to Moody's, the impact of the coronavirus outbreak on bulk chemical producers and specialty chemical producers is quite
different.
EBITDA is expected to decline by 30%~50% for some bulk chemical producers, while EBITDA for chemical companies serving the consumer, packaging and medical application markets is expected to decline by less than 5%.
In the field of bulk chemicals, the market demand for titanium dioxide has declined weakly, while the market demand for ethylene, styrene, polyethylene (PE) and polyvinyl chloride (PVC) may decline by 40%.
The coronavirus pandemic will trigger the consolidation of global base oil production capacity
Recently, Michael Achacoso, manager of lubricants and specialty products at Solomon Associates, said that the economic crisis caused by the new crown pneumonia epidemic may trigger the consolidation
of global base oil capacity.
The current global mineral base oil production capacity is about 37 million tons per year
.
The crisis will force 2%~5% of global base oil production capacity to be permanently closed, that is, 760,000~1.
9 million tons/year of production capacity
.
In the second half of the year, the global PE plant will continue to operate in reduced volumes
Global polyethylene (PE) production units are expected to remain in reduced volumes in the second half of 2020 as growing capacity can meet slowing demand
in most end industries, market sources said.
In the first phase of the pandemic, while lockdowns and logistics issues limited the supply of PE in some cases, demand was strong
in specific application areas such as the packaging industry.
After entering the second phase of the epidemic, weak demand and the gradual recovery of global PE supply will make the global PE market return to the pre-crisis oversupply
.
While PE demand in some application areas continues to perform well, sources generally expect global PE unit operating rates to be lower
in 2020.
Middle Eastern petrochemical producers lose raw material cost advantage
IHS Markit said that due to the collapse of international oil prices and the sharp decline in naphtha costs, petrochemical producers in the Middle East have lost their long-held raw material cost advantage over European and Asian producers, and this advantage is difficult to recover
before the end of this year.
Matthew Thoelke, executive director of the olefins and derivatives business at IHS Markit, said the cost advantage of petrochemical producers in the Middle East had disappeared in recent months, while European and Asian petrochemical producers were enjoying the benefits
of low naphtha 。 In the past, when crude oil prices fell, such as the 2008 global financial crisis, petrochemical producers in the Middle East briefly lost their feedstock cost advantage over European and Asian producers, but never before have they faced such a significant disadvantage and profitability pressure for such a long time, and are expected to continue to face this dilemma
for the rest of 2020.
