Demand for polyethylene (PE) in China may be reduced by more than 3 million tons due to coronavirus, according to ICIS.

Medical experts believe that the outbreak of coronavirus (2019-nKoV) will follow the SARS path and will die out no later than April or May, when the weather is usually warm in China. Coronaviruses in general, and SARS fade away when warm weather sets in. Moreover, Beijing hopes to develop a cure before the end of the first quarter.

Even so, demand for petroleum products in China in 2020 will decline compared to previous forecasts. This is inevitable due to the fact that Lunar New Year holidays are a period of peak consumption in China. During the largest annual human migration in the world, all missed bus, train, and car rides mean less consumption of drinks and snacks. Drinks and snacks are often packaged in PE one way or another.

Since packaging demand accounts for about 50% of final consumption in China, most of the lost demand due to reduced spending on the Lunar New Year cannot be recovered because it is the peak season. The demand for polyethylene needed for the production and packaging of Chinese exports will also be reduced.

Earlier it was reported that the ban on the use of disposable plastic, an outbreak of coronavirus, as well as debt and demographic factors may reduce demand for polyethylene in China by 4.1 million tons in 2020.

According to the ICIS-MRC Price Review, in Russia last week, buying activity in the local polyethylene market increased, processors began to replenish their raw materials for work in February. Excess supply is still preserved, but already for certain types of PE the market has begun to enter the balance of supply and demand.