Chemical Production in a Period of Pandemic
COVID-19 is sweeping through the chemical industry.
Chemical product demand is down in most sectors, and production has been severely restricted in others.
While it is hard to paint a full picture while standing in the middle of the storm, the statistics compiled so far make for some difficult reading.
Global chemical production fell 2.1% in February and 3.1% a month later. Worse hit has been China, where industrial chemical production fell a massive 6.4% in February and an even bigger 8.3% in March.
In India, the impact of coronavirus on the chemical industry has yet to be fully calculated, but news reports make clear how badly chemical production may be suffering, with the world’s largest lockdown grinding the economic activity of more than 1 billion people to a halt.
Worse still for the chemical industry is the government requirement that chemical facilities remain closed. As an April 13threport in the New Delhi based Business Today states, “India's chemical and petrochemical (C&PC) industry has urged central government to declare the entire value chain in the sector as ‘essential’ during the coronavirus lockdown period. The industry claimed that it has multiple cross-linkages and is critical for the functioning of many essential goods like food, edible oils, drugs, fertilizers etc.”
The report continues to note that, “According to the Indian Chemical Council (ICC), many essential supplies from the C&PC sector are stuck at various checkpoints in the country. Manufacturers are unable to produce, even if permitted to operate, as their employees are finding it difficult to reach work.”
The report also adds that the halt in chemical production in India will mean that the small demand that remains for chemical products may not be met. This has begun fears that foreign chemical manufacturers will attempt to off load their unwanted chemical stocks in India. At a time of crisis, the last thing the Indian chemical industry needs is price dumping.
Fortunately, most countries have permitted industrial chemical production to continue.
Unfortunately, most countries have seen a massive drop in sales for end-user industries. This has resulted in a collapse in demand for the chemicals used in the manufacture of consumer products.
As the industry journal Coatings World explains, “… large butadiene derivatives such as polybutadiene rubber and styrene-butadiene rubber are among the major components to produce auto tires and other auto parts including hoses, belts, and gaskets. With the halt in production facilities of several automobile manufacturers, a steep fall in the supply of tires in automotive industries has been witnessed. Thus, the continuing spread of COVID-19 across the globe is likely to impact demand chemicals.”
Other sectors have experienced an upside to the pandemic, with the journal reporting a, “… light rise in the demand for the packaging materials has been increased to prevent the contamination of food, medicine, personal care, and medical products thereby creating a significant demand for chemicals involved in the packaging industry.”
Meanwhile, “Due to the downfall in crude oil prices, the market of petrochemical is expected to be most affected.”
But perhaps what has damaged chemical production most, is the speed at which the situation is changing, with different countries enacting different restrictions at different times.
In one part of the world, construction is permitted, but not chemical production, while across the border, chemical production is allowed, but construction has stopped.
All of which is changing on a daily basis.
“Things are moving so fast—it’s unparalleled in pace,” says T. Kevin Swift, the American Chemical Council’s chief economist. “Normally, changes in economic conditions take months to develop, but now they are happening in days.”
Telling the industry journal CE&N, that, “He anticipates production could return to normal in the second half of this year, but economic growth won’t return until 2021.”
Economic growth in 2021? At least for the chemical industry, there’s light at the end of the tunnel.
Photo credit: Ich bin dann mal raus hier. from Pixabay, Peter H from Pixabay, CC0 from Pixabay, & Pexels from Pixabay