LONDON (GC Intelligence) — The spread of the coronavirus (COVID-19) in Italy and across Europe is slowing down demand for most engineering polymers amid fears that the worst is yet to come.
Italy
In Italy, the polymer markets have not ground to a halt but worries are increasing that there will probably be a considerable hit to demand.
The logistics are still working but at a slow pace, operating amid a state of emergency and only able to transport necessary volumes.
One sellers said “we cannot meet all the demand because we cannot deliver all the goods our customers are asking for.”
However, the impact has not been the same for all participants, with some saying their operations in Italy are normal while others said soon they may be shutting down production.
It is clear that the situation is a lot worse in Italy where all market segments are being impacted with varying degree.
Europe
However, fears of disruptions are increasing also in other key countries with particular concerns on auto demand.
Some suppliers to the industry said current demand is good but it is probably for auto sales in January, suggesting the worse is yet to come.
Others said they already had a challenging market before the virus and now demand is slowing down further, with car manufacturers already cancelling orders.
Meanwhile, other market segments were doing better, such as construction, electrical and electronics and consumer goods.
But as cases are increasing, most segments could feel the negative impact in the next few months.
Demand
As uncertainty about future demand increases, some buyers are finding it difficult to forecast their orders and are living hand-to-mouth.
Buyers are also concerned about a recession and are therefore keeping stocks low, which is driving down demand further.
What is more, as polymer prices are expected to decrease, some compounders are driving down stocks to make room for cheaper material.
Prices are likely to fall in the near future as demand slows down further in the coming months.
Demand is still holding up well as the outbreak has not peaked, even in Italy.
But as cases continue to increase across Europe, demand will continue to fall and along with it prices and margins.