“The coronavirus pandemic struck at a time when the sector was already in decline. Adapting to the new normal will necessitate management agendas that take into account the lessons learnt in the first half of 2020.”

COVID-19 is forcing petrochemical executives to reconsider the industry's future. Slowing demand growth, rising surpluses, and a diminishing value pool were all evident prior to the epidemic, and they've only gotten worse. Furthermore, the transition to renewable energy resources and a regenerative, or circular, economy will cause fundamental change in the business.

Growth has been halted

Following the financial crisis of 2008, the petrochemical industry saw sustained, significant development from 2010 to 2018, with the value pool increasing by 8% per year. From 2016 to 2018, a so-called super cycle (a period when petrochemical profits are larger than typical) resulted from high utilisation and favourable feedstock dynamics.

In general, the marginal producers are determined by industry utilisation (usually at the product-chain level), and the price of oil dictates the steepness of the cost curve in many product chains.

The industry value pool fell in 2019 due to major capacity increases and slower demand growth. The COVID-19 pandemic, which began in 2020, has hastened this demise. The impact of the coronavirus on petrochemical demand was uneven throughout value chains, with sharp drops in automotive and construction applications, but strong demand for packaging (notably in food, sanitary products, and medical applications). Stockpiling, a boom in delivery services, and increased healthcare-focused activity are all reasons for the latter, all in response to the epidemic.

Despite a few plants closing down in specific regions, industry participants have weathered the storm in the short term and are now looking ahead to the longer term.

Read more :- https://www.pukkapartners.com/insight/petrochemical-industry-how-decision-makers-are-coping-with-the-impact-of-covid-19



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