ICIS Webinar: Coronavirus restrictions gum up polymer logistics

Author: Al Greenwood

2020/03/25

HOUSTON (ICIS)--Measures intended to slow the spread of the coronavirus (Covid-19) are gumming up international trade flows and imposing logistical bottlenecks on supply chains.

In some cases, countries are concerned about letting foreign ships into ports, said Zachary Moore, ICIS deputy managing editor, Americas. He was among several speakers in a webinar, part of a series being hosted by ICIS.

In other cases, port workers are having trouble getting to work because of quarantines or other restrictions intended to fight the coronavirus.

India has imposed a broad lockdown, and this is leading to delays or even cancellations.

Trade barriers are also arising among the countries in Latin America, said Luly Stephens, ICIS markets editor. Some cities are in lockdown.

Moore said such trade barriers are even starting to appear among the countries in Europe, which previously lacked such restrictions.

These disruptions to trade are coming at a bad time for US producers, who spent much of the past decade building new polyethylene (PE) plants with the intention of exporting much of their product to foreign markets.

The PE intended for export is now finding its way back to the domestic markets in the US, Moore said.

For shipments across the Pacific, logistical bottlenecks could take about four weeks to manifest themselves, said James Ray, ICIS vice president of consulting - Americas.

The restrictions to shipping have limited the availability of containers, Moore said.

Ray said this could be aggravated by quarantines, which could impede the return of containers back to their home countries.

All of these logistical headaches could cause some producers to start maintaining strategic inventories of critical feedstocks, which, if depleted, could lead to shutdowns.

Some producers may rely on regional suppliers to secure such strategic raw materials, Ray said.

He does not expect this will happen with commodities, since companies have multiple sources for these materials.

Wednesday's webinar recording is available here.

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