How Will Coronavirus Affect Chemicals?

February 7, 2020

China, a major player in global economies, is in the throes of health crisis- Coronavirus. As they strive to contain the virus, the government has taken measures such as extending the Chinese Lunar New Year to keep people away from workplaces, and imposing travel bans that have left millions in lockdown. Millions more cautious and sensible citizens are just staying home.

Here are some of the ways the crisis is affecting chemical markets:

  • Production Offline: Chemical production plants are offline, due to the government directive to extend the Lunar New Year break.
  • Demand for Chemicals: Employees that use chemicals at manufacturing plants aren’t at work either. This is reducing overall demand for chemicals.
  • Reduced Feedstock: Oil refineries are cutting back, which reduces the feedstock for petrochemical plants.
  • Rising Inventory: Storage warehouses are full, so plants are cutting production.
  • Shipping & Receiving: Due to travel restrictions, normal shipping and receiving of materials is hindered.
  • Fuel Demand: With significantly reduced travel, demand for fuel is down. Oil prices are falling.
  • Missing Employees: Production in plants in China may be reliant on migrant workers, who are hindered from getting to work due to travel bans.
  • Demand for Hygiene Products: Increased usage of household cleaners, disinfectants, and hygiene products has increased the demand for chemicals used in these products.
  • Overall Economic Activity Down: Holiday spending in China was much lower this year than normal.

It remains to be seen what the long term impact of this will be on chemical markets. Regardless, the supply chain team at CORECHEM is committed to minimizing the impact of the crisis for our customers by multi-sourcing our product offerings. Reach out to your sales representative for further questions you may have about how the Coronavirus crisis could affect you.