Asia weathered the 'storm' of the epidemic, and China led the recovery of petrochemical downstream industries

Currently, China is leading the regional recovery of petrochemical and energy downstream industries. On March 9, the latest report released by ICIS showed that the demand for auto parts in China is growing rapidly, the supply of raw materials is tight, and it is urgent to improve the production plan. In the construction market, major infrastructure projects were quickly implemented, and raw material prices rebounded sharply. As a key focus, e-commerce has maintained a year-on-year growth of more than double digits, which has caused a blowout in packaging demand and rapid development of the industry.

Xu Rong, Director of ICIS China’s Market Development, believes that China's adoption of more government stimulus measures to promote domestic demand is in line with the guidelines for more attention to domestic growth proposed at the Fifth Plenary Session of the November 2020 Central Committee. This will result in the petrochemical market starting from the second quarter. recovery.

Strong growth in demand for raw materials in the automotive market

As the world's largest automobile market, China has demonstrated strong economic recovery capabilities during the pandemic of the new crown virus and is expected to continue until 2021, driving the demand for petrochemical products in the Asian market. In addition, the regional comprehensive economic partnership agreement composed of ASEAN, China, Japan, South Korea, Australia and New Zealand will also promote regional trade and supply chain regionalization.

With the recovery of the automotive industry, the demand for dashboards, panels, paints, coatings, helmets and tires in the interior of the car will promote such as butadiene rubber, butadiene acrylonitrile styrene, polymethyl methacrylate, Supply of raw materials for Maleic anhydride and Phthalic Anhydride. ICIS analyst Zhang Jiming pointed out that “due to the large sales volume of butadiene acrylonitrile styrene in 2020 and the low inventory, it is expected that home appliance manufacturers will increase their production plans in 2021.”

ICIS senior analyst Michele Bossi said: "In 2021, global demand for polymethyl methacrylate is expected to recover by 9.0%. Affected by China's growth of 8.9%, demand for PMMA in Northeast Asia is expected to increase by 7.9%."

Major infrastructures drove a sharp rebound in raw material prices. In 2021, with the rapid implementation of major infrastructure projects, China, as the world's largest construction market, will lead regional growth. According to information released by the Ministry of Electronics and Information Industry of China, by 2025, China is expected to invest RMB 10 trillion in advanced infrastructure projects, including high-speed rail, new energy vehicle charging stations, big data, and fifth-generation wireless networks. The total expenditure for new projects will exceed RMB 17 trillion. Accordingly, ICIS predicts that the demand for PVC and polyethylene will remain stable in 2021.

At the same time, since the beginning of September 2020, due to the sharp rebound in demand from China's Unsaturated polyester resin and alkyd resin industries, the import prices of phthalic anhydride and maleic anhydride in Asia have risen by 65%-70%. In addition, Asian epoxy resin prices rose by nearly 50% between September and November 2020, due to supply shortages due to unexpected plant shutdowns, and demand in the construction industry is accelerating. "Affected by the growth of China's construction activities and real estate investment, the demand for PVC in Northeast Asia is expected to increase by 6% in 2021." ICIS Petrochemical analyst Robert Searle said.

E-commerce sales push packaging demand blowout

During the lockdown and quarantine period, more and more consumers in China are turning to e-commerce or other online sales platforms. This trend may continue in the near future. According to data from the National Bureau of Statistics, from January to November 2020, China's online retail sales reached 10.5374 trillion yuan, an increase of 11.5% year-on-year; China's online retail sales of physical goods increased by 15.7% year-on-year, accounting for 25% of China's total retail sales of consumer goods.

The report released by ICIS analyzes that with the further recovery of the economy, China's online sales may continue to grow, which will promote a blowout of packaging demand in 2021. Due to the needs of the packaging industry, the demand for polypropylene, polyethylene and polyethylene terephthalate is expected to continue to grow in 2021.