WPC 2021: COVID-19 has had a varied impact on specialty chemicals sectors

19:03 PM | March 11, 2021 | Sotirios Frantzanas

The impact of COVID-19 has produced winners and losers in specialty chemicals and engineering plastics, according to two sessions discussing specialty chemicals on Thursday at the World Petrochemical Conference (WPC) 2021, being held by IHS Markit in a virtual format. Food and feed additives, nutraceuticals, and flavors and fragrances have remained robust in 2020, said Adam Bland, executive director/solvents & surfactants at IHS Markit. Specialty chemicals used at the forefront of combating the pandemic, such as hand-sanitizers, surfactants, and even some plastics for PPE equipment and packaging saw strong growth throughout 2020, Bland added.

“Overall surfactants have benefited with 5% growth in 2020, but this is driven by the home and personal care sector, which accounts for about 65% of the total surfactant market,” Bland said. The industrial and institutional (I&I) sector has been negatively impacted, he said. The big winner is the hand sanitizers with an increase of about $3 billion only at the institutional level in 2020, Bland noted. Biocides' overall market has not grown as fast as we expected despite being in the forefront of the fight against COVID-19, Bland said. 

Suchada Passararat, director/specialty chemicals insights APAC at IHS Markit noted that consumption of nonwoven fabric used to produce face masks, PPE, and disinfecting wipes increased 24% in 2020. Medical/surgical applications increased by 208%, Passararat said. The demand for nonwoven fabric in 2020 was 17 million metric tons and it is expected to remain the same through 2025, she said. Capacities increased to support the demand spike, and the possibility of oversupply is low even when demand for medical application of nonwoven fabric is going to fall in 2025, since the additional capacity is “switchable,” meaning it can be used in other applications for which demand will recover after COVID-19, said Passararat.

“Food additives are doing pretty well because they track the packaged food industry and overall the packaged food industry has done quite well during the pandemic,” said Marifaith Hackett, executive director/renewables & nutrition at IHS Markit. There have been a few exceptions, Hackett said, such as the consumption of food additives that are used in chewing gums and those used in soft drinks because both products have been impacted by the restrictions related to COVID-19, said Hackett. Food additives’ market will continue to grow, but demand for artificial sweeteners is expected to decline gradually, Hackett added. 

Aida Jebens, director/specialty chemicals at IHS Markit said that despite the increase in the use of water by households during the pandemic the industrial use of water declined, affecting the consumption of water treatment specialties, since industries consume around 2 million metric tons of specialty chemicals in water. However, this will be only temporary, since manufacturing is recovering and the use of water treatment specialty chemicals is expected to go up 2–3% this year based on the expected GDP growth, Jebens said.  

Meanwhile, Céline Büchel, principal research analyst/cobalt & nickel & battery materials at IHS Markit said that COVID-19 has had a limited impact on the electromobility side of the automotive market with electric vehicles (EV) sales in Europe growing massively during 2020. Even though there were strains in the supply chains of the automotive industry the consumption of cobalt and lithium has not been hurt by COVID-19 with over half of their consumption related to EV batteries, Büchel said.

“It will take two to three years for the consumption of polyurethane (PU) foams to recover to pre-pandemic levels,” according to Baljit Kaur, associate director at IHS Markit. In 2020, PU foams, which account for 65% of the overall consumption of PU, declined 12%, Kaur said. This is because PU foams are widely used in the automotive and construction industries that have been hit by COVID-19, she added.

“COVID-19 seems to have changed consumer demand and there has been a huge increase demand for all types of electronics, with people setting up their home offices and setting up arrangements for their children to take schooling from home,” with demand increasing especially in Asia, said Brendan Dooley, global director/engineering plastics at IHS Markit. In addition, an increase in demand in appliances worldwide is boosting the demand for engineering plastics such as Acrylonitrile Butadiene Styrene (ABS), pushing producer margins higher over the next five years, he said. Prices for polycarbonate (PC) are mostly level despite rising costs, nylon 6 prices follow the increase in costs, and prices for nylon 6,6 are expected to stabilize, Dooley added.   

Separately, prices for acetic acid decreased since the beginning of 2020 with “demand being impacted by COVID-19 and remaining quite low until late in the year, when demand started to recover again. So, price levels at all regions are expected to be up this year and in 2022,” based on recovering demand and due to very tight global sentiment, said Julian Skibitzki, associate director at IHS Markit. Demand fell by 5% owing to the impact of COVID-19 in 2020 and is expected to go up 8% in 2021, Skibitzki added.