LONDON (ICIS)--Both sellers and buyers of plasticizers are starting to feel the ramifications of the coronavirus, as the spread across Europe is impacting both those producing and those downstream, and this is starting to dent the chain.
- Further plant closures makes April demand uncertain
- Day-by-day decisions
- Logistical constraints a concern
Restrictions on both personal and professional lives are wide and varied depending on the location of offices and plants.
This week there has been confirmation of dioctyl terephthalate (DOTP) producer Valtris being forced to close down its unit in France “in order to ensure sufficient personnel were available to bring the site into a safe shut down status”.
A buyer commented that its plants in France and the UK have closed; the latter was taken out of its hands as the government imposed the decision. There are other cases of plants in France running at reduced rates to account for the lower downstream offtake.
Italian customers too have informed suppliers of shutdowns, but only for two weeks at this point in time.
Various buyers are looking at their order books every day and talk of more downstream orders being cancelled as the impact on end-user consumption in some sectors starts to gather momentum.
The automotive sector is particularly hard hit as the car industry announced a plethora of plant closures across Europe.
“We play demand day by day, nothing else we can do, we will continue to produce and work while we can,” one buyer said.
The medical sector is one area where demand is expected to remain robust, food packaging too and flooring for the new temporary medical centres and hospitals is creating some additional demand.
The question is how much this will offset the falling demand from the automotive sector and the industrial construction areas, which are expected to see a decline into April.
Players are having to be innovative and look at alternative formulations to find products that are considered necessary in the fight against the coronavirus.
Each day is expected to bring further challenges and there were some suggestions that the Easter break in April will result in some additional closures.
“We are not sure what [price drivers] are coming, it will change our economy and our way of thinking,” one seller said.
Logistical challenges are also at the forefront for some, with more and more border closures. However, long tailbacks at truck border crossings that were in excess of 40km between Germany and Poland at the end of last week, have since subsided. Nevertheless the logistics are expected to impact the running of the supply chain and some sources still see this as their primary hurdle to overcome.
“It is a bit complicated at the moment, we can see companies are still ordering products so do not see the downturn yet, but it will come soon and when it does there will be a big drop [in consumption],” one reseller said.
One source spoke of how fractured the "European Union" was, stating that all countries and sometimes within the countries, regions, were taking slightly different approaches to how to battle the virus.
"It is a disaster - potentially this affects everyone and yet everyone does their own thing," it added.
Price wise for this week, the plasticizer markets are said to be moving sideways, but all sources are only too aware that there will be a big storm coming and they are trying to brace themselves against the difficult conditions as best they can.
Plasticizers are used in plastics or other materials to impart viscosity, flexibility, softness, or other properties to the finished product.
Focus article by Jane Massingham