Coronavirus poses greater threat to China’s petrochemicals industry than SARS, says Wood Mackenzie

Wood Mackenzie has said it expects the coronavirus outbreak to have a much bigger impact on China’s petrochemicals industry than the 2003 SARS outbreak.

While China’s chemical industry took a hit from SARS, it quickly recovered thanks to the country’s impressive growth momentum at the time, whereas today the economic background is much less favourable.

Kelly Cui, Wood Mackenzie Principal Consultant, said: “We believe the market should recover from late Q2, mimicking the post-SARS trend of a bounce in demand for consumer goods.”

“However, given the tighter restrictions on transport movement, delayed recovery in operations, and higher rate of contagion compared to SARS, the coronavirus outbreak will have a greater impact on all markets, including petrochemicals.”

“Transport restrictions and the extended holiday period will delay the start-up of projects scheduled for H2 2020. In the olefins sector, we optimistically estimate there will be around two to three months’ delay.”

The huge demand for mask and syringe production since the start of the outbreak has seen an increase in fibre polypropylene demand, but only four grams of high melting point polypropylene fibre is needed to produce a single mask, hence why polypropylene demand from masks is limited.

William Lui, Senior Polyolefins Consultant, said: “China produced five billion face masks in 2019 and we expect the number to increase by at least 30 per cent in 2020.”