The global polyolefin market is expected to decline in 2020 due to weaker end-market demand for applications such as construction, automotive and industrial. However, according to GlobalData's Hydrocarbonprocessing, weak demand due to the pandemic has been partially offset by strong growth in sectors such as packaging, FMCG and healthcare.

When asked about the weak demand in the polyolefin market, David Leggett, automotive industry analyst at GlobalData, commented: "The global automotive industry is facing a 16-17 percent volume decline led by the pandemic this year. This means there is much less demand for materials such as polyolefin in the automotive manufacturing industry. Although the global auto market is in a recovery phase, the sales outlook remains uncertain amid the persistence of the pandemic and its adverse effects on the economy. Basic demand levels are not expected to return to pre-pandemic levels until 2023."

The strong growth in FMCG and polyolefin use in packaging is likely due to consumer behaviour. Carmen Bryan, consumer Analyst at GlobalData, noted: "The COVID-19 pandemic has led many consumers to be more cautious in their food and FMCG purchases. Despite ongoing environmental concerns, many are switching to traditional packaging materials, such as PET, as these are perceived to be safer and more hygienic. In fact, 53% of respondents to a GlobalData survey in June said they were concerned about the safety of product packaging in the face of the pandemic. — That concern has persisted over the past few months, and as of the October survey, it was at 50 percent. This suggests a new trend with the resurgence of single-use plastics that securely seal food and drink."

GlobalData Oil and Gas analyst John Paul Somavarapu commented: "With a gradual appreciation in economic activity, demand for polyethylene and polypropylene is likely to improve towards the end of 2020 and maintain upward momentum from 2021 onwards."

"The pandemic has impacted demand for polyethylene and polypropylene in the short term. As a result, polyolefin producers have either reduced operating rates, stopped production or declared force majeure to weather the tough economic situation. Petrochemical companies are closely monitoring economic developments and will conduct a strategic review of the progress and development of key projects."

In response to the economic impact of COVID-19 on various industries around the world, major petrochemical companies are looking to delay final investment decisions (Fids) or defer project execution as much as possible. For example, the FID for the PT Chandra Asri Perkasa Cilegon polyolefin project has been postponed from 2021 to 2022, while the PTT Global Chemical Belmont County project has been pushed back from the originally planned 2020 to the first quarter of 2021.

"Although the prospects for increasing FID in the sector look challenging, the company wants to focus on key projects and ensure that they are prioritised for completion," Somavarapu noted.

Polyolefin capacity additions are mainly in Asia. — Mainly China and India. — These countries aim to be self-sufficient to meet the existing and growing needs of their respective countries. Other large countries such as Russia, Iran and the United States have also increased their production capacity significantly.