The recovery is still unknown! Challenges in the automotive chemicals market

Recently, major global chemical companies have announced their first quarter financial results. The first-quarter financial reports of major chemical companies were basically in line with expectations, but in subdivided areas, some sub-sectors related to the automotive industry experienced a severe recession. The reason is that the auto industry is in a dilemma in the epidemic, which has caused serious impact on the chemical sub-industry related to the auto industry. As the recent global epidemic of pneumonia has only moderated slightly and the trend is still uncertain, the automotive chemical market is still facing huge challenges.

Decline in the automotive industry

As an important downstream industry of the chemical industry, the automotive industry is facing a severe recession. Recently, the world's auto companies also announced the first quarter of 2020 financial reports, in addition to Tesla, BMW and other corporate profits are still rising, most car companies have experienced serious profit reduction or even loss. Even Tesla and BMW have significantly reduced their car production and sales.

It should be noted that for the European and American countries, the first quarter is not the worst period of the epidemic, and the situation in the second quarter may be worse. Judging from the situation in Northeast Asia, the impact of the epidemic on the automotive industry should be more serious than the current financial report.

During the severe period of the New Coronary Pneumonia epidemic, automobile production and sales in Northeast Asia fell into a severe recession. China ’s total vehicle sales in the first quarter fell 42.4% year-on-year to 3.67 million units, while total production fell 45.2% year-on-year to 3.47 million units. In Japan, passenger vehicle sales in the first quarter of this year fell 10.2% year-on-year to 1.37 million. With the development of the Japanese epidemic, Toyota's output has been cut by more than 40%. In South Korea, official data show that car production in the first two months of this year fell 27.9% year-on-year to 440,000.

Anne Sun, an analyst at An Xunsi, said: "Due to the impact of the New Coronary Pneumonia epidemic, the global automotive industry, which has grown weak in recent years, has fallen into a deeper dilemma. However, the supply and demand structure of the automotive industry is different, and the impact on petrochemical products may be regional Varies with product. "

Demand for automotive chemicals falls

Market participants predict that due to the decline in automobile production and sales, the demand for materials such as synthetic rubber, polypropylene (PP), acrylonitrile-butadiene-styrene copolymer (ABS), polystyrene (PS) will appear unprecedented Setback.

Synthetic rubber bears the brunt. Among them, styrene-butadiene rubber (SBR) and polybutadiene rubber (PBR) are used for automobile tires, and nitrile rubber (NBR) is used for automotive parts such as seals, gaskets, gaskets and transmission belts. Anne Sun said: "Synthetic rubber may be the hardest hit by the slowdown in the automotive industry, especially SBR, because 70% of the world's SBR is used for tire production." In April, spot trading in the Asian rubber market stalled. A rubber trader said: "Due to the epidemic, major tire and car manufacturers are already closing factories, reducing production capacity, and demand has collapsed." At the same time, due to the collapse of demand in Europe and the United States, butadiene supply in Asia has instead The increase has further exacerbated the oversupply in the region.

The PP situation is good, and the automotive industry accounts for 10% of its global demand. John Richardson, a senior analyst at An Xunsi Asia, said that PP demand from the automotive industry will suffer huge losses, and the demand for automotive PP in some countries in Southeast Asia has been reduced by at least 30%. However, due to stronger demand for injection-molded and film-grade PP for packaging and non-woven PP for masks, total global PP consumption may not change much.

As far as ABS is concerned, An Xunsi analyst Jimmy Zhang said that the automotive industry accounts for about 11% of total consumption, while the automotive industry's share of total PS demand is considered low. Due to better performance and more competitive prices, the replacement of other plastics by some forms of ABS may make up for the loss of demand for ABS caused by the downturn in the automotive industry.

When to rebound is unknown

In the context of the current global epidemic, it is not known when the global auto industry will recover. At present, it is known that, except for a few countries with better epidemic conditions, such as China and South Korea, the operating conditions of global auto companies in the second quarter will be far worse than the first quarter. The recovery of the automotive industry and the automotive materials industry will not be earlier than this time.

Anne Sun analyst An Sun said: "Global car sales are likely to rebound in the second half of the year. Because of the need for epidemic prevention, people around the world are more likely to avoid taking public transportation." From the situation of countries that have lifted or partially lifted the blockade Judging from this, the auto market has indeed rebounded. However, at the same time, the new coronary pneumonia epidemic continues to cause severe damage to the global economy and has caused massive unemployment worldwide. When the global economy is facing the worst recession since the Great Depression of the 1930s, buying a new car will be the last thing people want to consider. In this sense, it may be premature to expect the auto industry to recover in the short term. Correspondingly, the recovery time of vehicle chemical demand is also unpredictable.