According to analysts at analytics company GlobalData, the strong gains in polyolefin use within the packaging sector may be due to consumer behaviour
Polyolefin demand is expected to decline in 2020 due to weaker demand from applications such as construction, automotive, and industrial sectors (Credit: Pixabay)
Demand from the packaging, healthcare and fast-moving consumer goods (FMCG) sectors is expected to help the polyolefin market during Covid-19, according to analytics company GlobalData.
The sector is, however, expected to decline in 2020 due to weaker demand from applications such as construction, automotive, and industrial.
Polyolefin can be used as sheets or foams in a wide variety of packaging applications and is sometimes involved in direct contact with food.
When asked about the weak market demand, GlobalData automotive analyst David Leggett explained that the global auto industry is facing a “pandemic-led sales decline of 16-17%” in 2020.
He added: “That translates to much lower demand for materials such as polyolefins in automotive manufacturing.
“Although the global vehicle market is in the recovery phase, the outlook for sales remains uncertain while the pandemic and its adverse economic impacts persist.
“The underlying level of demand is not forecast to recover to pre-pandemic levels until 2023.”
FMCG and packaging polyolefin gains ‘may be due to consumer behaviour’, say analysts
While some industries are struggling, the strong gains of polyolefin use within FMCG and packaging may be due to consumer behaviour.
GlobalData consumer analyst Carmen Bryan said: “The Covid-19 pandemic has led many consumers to report being more cautious when buying food and FMCG products.
“Many have reverted to more traditional packaging materials such as PET, despite ongoing environmental concerns, as these are perceived as safer and more hygienic.
“In fact, 53% of respondents to GlobalData’s survey in June noted that they are concerned about the safety of product packaging amid the pandemic – a concern that has remained relatively stable over the past few months, standing at 50% as of the October survey.
“This suggests the emergence of a new trend as single-use plastics that securely seal food and beverages return to popularity.”
GlobalData oil and gas analyst John Paul Somavarapu added: “With the gradual appreciation of economic activity, the demand for polyethylene and polypropylene is likely to improve towards the end of 2020 and maintain the upward momentum from 2021.
“The pandemic has impacted the demand for polyethylene and polypropylene in the shorter term.
“Consequently, polyolefin producers have either lowered operating rates, halted operations or declared force majeure to withstand the challenging economic conditions.
“Petrochemical companies are closely monitoring economic developments and would undertake a strategic review of the progress and development of key projects.”