The US is the largest affected country in the world because of Covid-19 outbreak, after it was first reported in China. More than 1.75 million people have been affected in the US, as the transmission of virus is larger in comparison to other parts of the world. Authorities across the US are rolling out plans now to relax the lockdown measures, after strict restrictions were imposed over the last few months. Though easing of restrictions could lead to further outbreaks, many states are moving forward with their plans, with an intent to reopen economic activity.
The Covid-19 outbreak, in addition to crude oil price crash, has pushed petrochemicals companies in the US to announce project delays. The largest number of project delays to date have been announced in the US, which accounts for more than half of the total announced Covid-19 impacted capacity. Few of the major complexes which have been affected due to Covid-19 pandemic include construction works at the Shell Beaver County Complex and utility works at the Formosa St James Parish Complex. Prevailing uncertainties and economic slowdown due to the outbreak could push companies on more such announcements over the short term.
Most of the upcoming projects are largely concentrated in US gulf coast states such as Texas and Louisiana, which were primarily aimed at taking advantage of Shale gas. The projects are facing start-up delays due to Covid-19 outbreak. Few of the delays include Corpus Christi Polymers Project, scheduled for Q4 2020, has been postponed to Q4 2021 and Formosa Plastics Point Comfort Polyethylene project, set to come on-stream in Q1 2020 has been delayed to Q3 2020. The industry foresees more such delays, which would further impact the progress and start-up of subsequent projects.
The pandemic has compelled the US petrochemical companies to re-evaluate their investment strategies, impacting their FID plans. Projects under early phases of development, are expected to be hit hard. FID of PTTGC Belmont County project, has been postponed indefinitely due to the outbreak. CP Chem. has deferred FID plans of Gulf Coast Complex and is closely monitoring the economic developments. Companies are likely to remain disciplined in considering capital deployment opportunities and prioritize strong execution of growth projects that further bolster their business.
Petrochemicals demand has been knocked down, as the end markets such as automotive, housing and construction etc. experience a decline in demand of their own. However, some of the other end markets such as Food & Medicinal packaging, consumer etc., which has been considered as essential services, continue to hold demand from going down further. Demand of key polymers in the US is expected to decrease by around 4% in 2020, and is set to rebound in 2021.
