The regional economic growth is expected to decline sharply in 2020 amid the spread of the Covid-19 outbreak. Credit: Avigator Fortuner / Shutterstock. |

Covid-19 pandemic has significantly impacted the global economy. The regional economic growth is expected to decline sharply in 2020 amid the spread of the Covid-19 outbreak. A strong and collaborative effort is required to prevent the outbreak and curtail its adverse impact on the economy. Growth in key Asian economies is expected to rebound in 2021, as a reversal in containment measures and stimulus packages is likely to increase the economic activities in the region. Demand for petrochemicals in Asia has a strong correlation to macro-economic growth, and hence, the region’s economic outlook is expected to reduce petrochemical demand growth in the short term and recover thereafter.

The regional capacity additions are largely concentrated in China, targeting self-sufficiency to meet the country’s existing and growing petrochemicals demand. China is followed by India and Indonesia, also capitalising on its growing demand. The Covid-19 outbreak and lower crude prices have prompted petrochemical majors in the region to announce project delays. Projects under early stages of development are likely to be postponed as companies look to re-evaluate investment strategies. Supply chain disruptions and labour shortages have affected the under-construction / commissioning projects. As a result, companies would work closely with contractors and suppliers to revise timelines.

Petrochemical Capacity Additions in Asia by Country

Source: GlobalData Oil and Gas Intelligence Center

Note: Capacity details given above are only for projects, for which capacity is available / reported, and the number of projects given also includes projects, for which capacity is not available / reported.

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Polymer demand in Asia was affected due to lockdown measures undertaken by governments to contain the Covid-19 pandemic. However, the recent uptick in industrial / business activities and gradual re-opening of economies are set to strengthen the demand for polymers. The demand from key end-use segments such as construction and automotive has been affected as sluggish demand and manufacturing supply chains demonstrated reduced growth rates. However, demand from packaging and healthcare sectors would sustain the growth of the industry. Demand growth of key polymers in Asia is expected to contract by approximately 1% in 2020 in comparison with an average growth of approximately 5% in the past three-four years.

The Covid-19 pandemic is unprecedented and companies have responded by developing strategies and implementing stringent measures to battle economic uncertainty and weakened growth. Companies are channelling their capital investments towards maintaining the existing asset base and are undertaking a strategic review of the current scenario and schedule their growth projects accordingly.