The Influence if the Fall in Demand for Plastic on our Fight Against COVID-19

This article takes a closer look at the falling demand for plastic and its influence on our fight against Covid-19.

According to a warning issued by LyondellBasell Industries, the demand for industrial plastics will inevitably fall this year despite the greater need for food packaging, plastic shields, face masks and various items that help limiting the spread of coronavirus.

This US-listed chemicals corporation predicted a 15% fall in demand for two types of plastic, as a result of people buying fewer household appliances and automobiles due to the health crisis.

This is a major drop that signals a rare retreat of a compound that’s directly linked to the rising of the living standards worldwide.

Officials of LyondellBasell Industries have stated that plastics consumption thrives even during recessionary periods, the only moment when polyethylene and polypropylene decreased being during the global financial crisis in 2008.

Even then, the decrease was nothing but a mere 3 to 4 per cent, not 15 per cent. Under these circumstances, we can expect markets to get flooded by an oversupply of plastics, and therefore major problems for the major players in this industry.

The Long-Term Global Growth Trends Of 3.5 – 4%

Giant players in this industry such as ExxonMobil, Royal Dutch Shell and Dow promised a whopping amount of over £1.5 billion for giant facilities processing cheap raw materials resulting from shale extraction.

The result has been the availability on the market of a huge amount of polyethylene products such as shopping bags, packaging films, car bumpers, shampoo bottles, and pipes. Many manufacturers started to use these materials, due to their convenience and relatively low price.

New hygiene best practices have determined coffee chains to use disposable cups. At the same time, the bans on straws, stirrers and other single-use plastic items have been delayed, as a consequence of the global coronavirus crisis. As a result, the battle against plastic waste has seen a major slowing down.

Covid-19 has led to a rising of the demand for polymers, as hospitals and medical clinics required a higher volume of personal protective equipment such as hospital gowns and gloves.

Unfortunately, the downfall of constructions, automotive and aerospace industries negatively affected the demand for plastics, as the demand for such raw materials took a nosedive. Apparently, this downfall was so dramatic that it counteracted the effect of the above-mentioned developments.

Dual Challenges

According to experts in the chemical industry, the two negative events that triggered so many problems were the coronavirus pandemic and the oil price crash.

Before these two events, values for some plastic varieties were already at their lowest values for quite a long time. This lingering was nothing to be happy about anyway, but now, with the current health crisis, the situation got even worse.

Specialists also consider that this year is going to be extremely challenging. They are unsure how the path to recovery is going to look, taking into consideration that the worst is yet to come.

ICIS analysts believe that the world is going to see a decline in commodity polymer production, with effects that might extend during 2021 and beyond. The major players in this industry are already experiencing a negative effect, as they all expect to see losses in the second quarter.

On a more positive note, the hit to plastics could end up less striking, should the world manage to avoid another major wave of the viral pandemic. It is possible that the reopening will trigger a higher demand for plastic, as affected industries start seeing an increased interest in their products.