CONVID19 caught us off guard. How severe the impact on petrochemical industry is, particularly in China.
Based my discussion with the industry,
it seems that direct impact on petrochemical has been minor up to this point.
Operation of petrochemical plants in China and rest of Asia has been affected by in a much less magnitude than any other sectors.
In late January, when the epidemic spread quickly, Chinese government took a strict action by locking down cities and provinces,
and restricting people movement, and our people have been disciplined in following orders. The measure has proved to be very
effective in controlling the epidemic. However, the downside is that it almost crippled the economic activity entirely.
For petrochemicals downstream processing industries in China, since most of them are labor intensive and depend on migrate labors,
they have been hit hard; and most of them had been down for 2nd half January and entire February due to labor movement restriction.
That had led to high inventory for petrochemical products and therefore choked the upstream.
From the beginning of March, the downstream processors have been gradually back in production,
as the epidemic is progressively contained and labor movement is gradually relaxed.
Downstreams are ramping up production now and rush to fulfill the orders missed in the past months.
As a result, demand for petrochemicals is recovering, margins are fairly good thanks to sunk crude price,
and petrochemical producers are now mostly back to full operation.
Post time: Mar-10-2020