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Plastic demand drivers: Some sectors gain, others weaken
The coronavirus disease 2019 (COVID-19) pandemic is an
unprecedented global crisis that, by many calculations will have a
deep and devastating economic and social impact on the scale of the
Great Depression, and in the process will far surpass the fallout
from the 2008-09 recession.
Apart from the direct economic and business impact, it is becoming
clear that this pandemic will also cause far-reaching structural
and behavioral shifts: people working more from home, increased
expenditure on health and wellbeing, preference for online
shopping, and reduced discretionary expenditure, to name a
few.
For plastics, the big question is: will the impact outpace or lag
the economic fallout? At the outset, this crisis gave plastics a
major image makeover amongst consumers; there is now a widely held
view that plastic products are safer and cleaner than the recycled
and reusable solutions being touted earlier and are at the
forefront of the fight to contain the spread of contagion. Gone are
the days when plastics will be spoken of only in terms of
environmental leakage and a ban.
Plastics will also benefit from increased spending on household
cleaning, hygiene, and personal protection products, as well as
higher domestic food consumption from a more homebased life.
However, because this crisis will also cause deep destruction of
personal wealth and economic uncertainty, consumers will also
reduce discretionary spending on leisure, entertainment, travel and
tourism, and eating out, which will impact related plastics
consumption. Apart from these areas of the economy, major sectors
including automotive and white goods will also face tremendous
headwinds.
Global light vehicle production is expected to drop more than 20%
because of the COVID-19 pandemic—nearly a 19 million unit
decline over 2019, according to the latest IHS Markit forecasts.
The biggest disruption is expected to hit in the first half of the
year, with year-over-year output expected to be down by 24% in the
first quarter, and by 44% in the second quarter as lockdown
measures intensify.
Plastics on the global front combating the COVID-19
outbreak
Public discussions about plastics in 2019 were dominated by
sustainability actions with a focus on packaging and environmental
pollution problems. Single-use plastic was facing more scrutiny
than it ever had because of consumer and regulatory backlash;
however, usage in the medical industry could be the area where
individual consumers have the least negative view. The pandemic is
putting plastics at the heart of the fight and treatment.
Ventilators, masks, and personal protective equipment (PPE).
Plastics have revolutionized the medical industry and represent the
largest group of materials used in medical technology today.
Plastics used in healthcare can be advanced medical-grade polymer
materials that comply with regulatory standards specifically
engineered for medical usage or commonly found plastics used in
consumer packaging. Plastics are valued in healthcare because of
their versatility, sterile nature, safety for patients and
providers, cost effectiveness, ease of use, and utility in new
applications and solutions.
There is an almost endless list of medical applications for
plastics. Polyvinyl chloride (PVC) can be found in approximately
40% of all disposable medical devices, including flexible fluid
bags, tubing, oxygen, masks, surgical gloves, etc. Polycarbonate
(PC) is the material of choice for medical devices and equipment,
replacing glass applications in items such as blood oxygenators,
hemodialyzers, intravenous connectors, and high pressure syringes,
in addition to safety glasses and face shields. Given its clarity
and ease of sterilization, polystyrene (PS) is used for a wide
range of applications, including tissue culture trays, test tubes,
petri dishes, diagnostic components, and housings for tests.
Plastics will continue to offer exceptional solutions in the
future.
COVID-19 hits the economy where it hurts: consumer confidence,
which slows downstream demand in many segments. Polymer demand is
impacted in the short, medium, and long term. The intensity of the
effect differs according to the market segments. A negative demand
impact is expected to continue into 2021. IHS Markit offers a
long-term outlook 10 year forecast on supply, demand, price and
margin globally and on a country level, along with a live capacity
database and trade flow analysis on a country-to-country basis in
our
World Analysis (WA) service.
The transition to plastics sustainability faces new challenges but
remains a global priority even with the pandemic, oil price,
economic downturn. The issues are not going away but rather need to
be addressed in a more challenging environment than envisioned just
a few months past. The current market volatility forces companies
to reinvent themselves creating a pivotal time to adopt forward
thinking policies to come out a leader in the industry.
IHS Markit is developing a special study, "Changing
Course: Plastics, Carbon and the Transition to Circularity",
which will provide a comprehensive understanding of the current
regulatory environment, stakeholder policies and industry group/NGO
initiatives and how these activities will develop under different
scenarios for society's transition to circularity. The study will
also provide an understanding how alternative technologies for
recycling and recovery, both mechanical and chemical, will develop
and fit within an overall macro infrastructure / reverse supply
chain designed for circularity.
Posted 12 May 2020 by Kaushik Mitra, Executive Director, Polyolefin, EMEA, IHS Markit and
Martin Wiesweg, Executive Director Polymers EMEA, IHS Markit