Analysts expect domestic demand for chemical products to be mixed after the Lunar New Year holiday
After the 2021 Spring Festival, the chemical market conditions in China and other celebrated festivals in Asia will be different from previous years.
Although China is about to celebrate the Lunar New Year (February 11 BBB 0 17), companies and factories will resume operations after the Spring Festival than expected due to an increase in cases of the northern coronavirus in some cities and regions. Imposed blockades and promoted millions of migrant workers to celebrate the New Year on the spot.
The problem is that it remains to be seen how much demand for plastics recovers in Asia, as companies are back in business earlier than in the past few years. In previous years, Chinese factories usually closed for two to four weeks during the Chinese New Year holiday.
"Most small and medium-sized chemical plastic processors in China will gradually resume production after February 26. With some workers not returning home this year, demand could recover sooner than usual. This year's Labour shortage may not be severe. Amy Yu, senior analyst at ICIS, said.
The new trend for companies to quickly get back to work after the Lunar New Year holiday is a good thing for the Chinese economy, which has expanded manufacturing for 11 straight months and met demand for plastics across Asia.
Rhian O'Connor, senior analyst at ICIS, said: "Last year, a lot of the chemical demand in China came from exports, particularly for pandemic related supplies such as face masks, laptop computers and home office screens." "With blockades in Europe and other Western countries, some of that demand is likely to continue this year."
"Shopping patterns have changed and online shopping is increasing. This is unlikely to change in the future, but it could benefit packaging polymers (such as shrink and stretch films) and more durable products (such as polymers used in electronics)." O'Connor added.
The need for vaccines will benefit specialized applications such as polypropylene for syringes. But it is still only a small fraction of total demand, "he said.
The slowdown in China's manufacturing activity in January was inevitably reflected in the fall in the official PMI to 51.3 from 51.9 in December, due to the combined impact of the upcoming Lunar New Year holiday and the resurgence of the epidemic.
As a result of the pandemic's impact on demand, companies said growth in production and new orders had slowed, while new export jobs fell, the report said.
"China's domestic demand should have been beaten in the first quarter. The resurgence of an epidemic in some areas has limited travel plans. This may affect sales during the Spring Festival holiday." O 'Connor believes.