Coronavirus: Impacts on China Petrochemical Industry Ann Sun, Rachel Qian On behalf of ICIS Petchem Analytics, Asia 2 April 2020
Fragile markets are bracing for the epic global volatility - Prices of key petrochemical markets in Asia have fallen to their lowest since the 2008 global financial crisis - Crude oil price slumps Global IPEX vs Brent 2 Data source: ICIS
Agenda 01 Coronavirus' impact on China end-use consumption Interactions with China petrochemical industry 02 03 Value chain zoom-in of impacts analysis Date 3
Coronavirus' impact on China end-use consumption 4
What’s the story of China? (COVID-2019: No of Confirmed Patients: To-Date) China Rest of the world 800 700 Mar 11 Hubei resumption Jan 23 600 WHO declares pandemic Wuhan travel ban & Thousand person 500 Luna new year holiday 400 Feb 10 Jan 27 Resumption (Outsides Hubei) 300 Holiday extend to Feb 2 200 100 Data source: CEIC, World Health Organisation 0 February March January PRODUCTION SHUTDOWN (OUTSIDES HUBEI) MARKET DEVELOPMENT PRODUCTION SHUTDOWN (HUBEI) OPERATION RATE INCREASE GRADUALLY LABOR SHORTAGE LOGISTIC CONSTRAINS PETROCHEMICAL OUTPUT CUT INVENTORY RISE
2020 starts with a short, sharp, recession Q1 China COVID-19 ease China COVID-19 outbreak Global COVID-19 ease Global COVID-19 outbreak Production compensation & Sales & Production disruption Consumption & Exports recovery Exports decline • • • Consumables consumption loss Production recovery Circulation within the domestic • • Inventory rise Destocking activities economy to accelerate • • • Vessel availability difficulty Global supply chain disruption Global supply chain recovery • • • Potential credit problem Facing second-round outbreak risk Petrochemical capacity expansion • Stimulus policies expectation concentrated Date Presentation title 6
Potentially 3% GDP growth in 2020? STORIES ABOUT GDP • 5.5% growth needed according to the 13th Five-Year Plan • 2020 target setting postponed Consumption • Structure changing Take time to heal Supportive guidance policy published on 13 Mar 2019 share Investment Last choice to drive growth “New infrastructure” is one new direction, 58% including 5G, big data, AI, etc. Net export 31% At a risk amid pandemic Increased the export tax rebate from 20 Mar 11% Data source: CEIC, China National Bureau of Statistics, ICIS
Interactions with China petrochemical industry 12
Another key challenge on global petrochemical industry - booming capacity 13 Data source: ICIS Supply & demand database
Value chain zoom-in of impacts analysis 18
CONTACT US OLEFINS & DERIVATIVES Amber Liu Amy Yu Joey Zhou Ann Sun Lina Xu amber.liu@icis.com amy.yu@icis.com joey.zhou@icis.com ann.sun@icis.com lina.xu@icis.com METHONAL AROMATICS & & GLYCOLS DERIVATIVES Rachel Qian Jenny Yi Jimmy Zhang rachel. qian@icis.com jenny.yi@icis.com Jimmy.zhang@icis.com
It was the spring of hope, it was the winter of despair. Charles Dickens 35
Thank you Q&A Contact us Contact us Ann Sun Rachel Qian Ann.sun@icis.com Rachel.qian@icis.com +86-21-5155 0851 +86-21-5155 0263
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