The outlook for the European polyolefin market is worrisome

Recently, ICIS analysts said that although the European polyethylene (PE) and polypropylene (PP) markets have not yet been severely affected by the new crown pneumonia epidemic, they believe that the real test moment has not yet come, as weak demand hits capacity growth

The industry is in trouble

Before the COVID-19 outbreak, European PE producers were bracing for a bleak 2020, as an increase in global low-cost PE capacity would impact the profitability of PE producers in the region

But the PE market has been surprisingly strong so far, as consumers have been confined to their homes for months, strong demand from packaging applications and a sharp drop in crude oil prices have kept European PE producers profitable

Demand for PP in the auto industry has plummeted as automakers across Europe shut down during the peak of the pandemic, hitting the PP market significantly

gloomy market outlook

Containment measures triggered by the Covid-19 outbreak have led to a significant decline in overall economic activity, with demand for some petrochemicals plummeting

Low Density Polyethylene (LDPE) and Linear Low Density Polyethylene (LLDPE) are the most commonly used and strongly demanded PE varieties in packaging applications

Consumers have been slow to shop offline since lockdown measures began to ease

LyondellBasell CEO Bob Patel told the Financial Times that the PE and PP markets have been growing for the past 25 years, with the only exception being 2008 fell 3% to 4%

Companies are considering delaying the commissioning of new capacity amid slowing growth in the PE market

From 2020 to 2021, the PP market plans to add 15 million tons of new capacity per year, and 78% of the new capacity will come from Asia, of which 59% will come from China

Recycling curbs demand

Although the Covid-19 pandemic has suspended the EU's circular economy plans, the industry cannot ignore the EU's plans to advance the green agenda

Compared with the recycling of polyethylene terephthalate, the recycling of PE and PP in Europe is still in its infancy