By: Joko Priatmoko, Technical Support Consultant, Aramco Chemicals Company
Oil and chemicals markets have been severely impacted by COVID-19, but the pandemic has caused a spike in demand for some petrochemical products. While there can be few winners in the fight against coronavirus, polymers in particular have proven their resiliency, worth and value in confronting the infection. This has led to rising demand for healthcare products, flexible packaging for food and e-commerce goods, as well as Personal Protective Equipment (PPE). The two key polymers to have an impact in this area are polypropylene (PP) spunbond and polymethyl methacrylate (PMMA).
In the hygiene and healthcare sectors, the global need for items such as PPE, syringes, vials, wipes, medical cartridges, surgical masks and gowns has led to a surge in demand for products like PP spunbond non-woven fabric. One forecast predicts the spunbond non-wovens market will grow from $12.7 billion in 2018 to $18.3 billion by 2023, a Compound Annual Growth Rate (CAGR) of 7.6%. PP is likely to be the largest and fastest-growing segment in the global spunbond market, with personal care and hygiene forecast to be the biggest and fastest-growing end use segment.
There has also been significant interest in PMMA, otherwise known as acrylic, for new types of applications. This coincides with rising demand for protective shields to restrict the spread of the virus in public transport, offices, commercial stores, hospitals and pharmacies. PMMA lends itself to this purpose because it can be sterilized without impacting appearance or transparency, creating an ideal barrier between supermarket cashiers and shoppers, or between taxi drivers and passengers.
This signals a new use for PMMA sheets, for which higher COVID-19 demand is offsetting weaker consumption in the main automotive and construction sectors. In fact, PMMA has emerged as the most sought-after polymer in 2020, ahead of polycarbonate (PC) or polyethylene terephthalate-glycol (PET-G). Shields made from PMMA may well be a common sight moving forward: literally becoming part of the furniture in the post-COVID-19 new normal. This would in turn support further long-term growth potential.
Single-use plastic bags and disposable plastic bags, criticized for their environmental impact, also have a role to play with coronavirus-conscious retailers and consumers. Before the COVID-19 outbreak, sustainable packaging was on every Fast-Moving Consumer Goods (FMCG) company’s agenda. However, a shift towards more plastic packaging to help manage infection has altered the landscape - at least for the near future.
That is supported by higher demand for plastic packaging in general. The pandemic has shut down restaurants and food-service outlets, sparking a shift to grocery purchases. There is also a preference for online shopping over visiting public malls and high-street shops, increasing parcel shipments. Health precautions also demand more stringent protection for medical supplies. Such changes in behavior will not disappear overnight. As a result, the global packaging market is projected to grow from $909.2 million in 2019 to $1.0126bn by 2021, at a CAGR of 5.5%. The most optimistic forecasts suggest a CAGR of up to 9.2% over that period, while the least optimistic predict a CAGR of 2.2%.
However, plastics manufacturers face lower demand for engineering plastics in particular due to reduced production of vehicles and equipment. This is particularly the case in the automotive, construction, electrical and electronics sectors. PMMA producers have been able to offset this due to rising demand for shields, but sales of other products such as Nylon 6 - the waterproof material used to make machine parts, airbags, carpets, ropes and hoses – have suffered.
Yet despite temporary disruption, conventional demand for products is expected to return as businesses resume production with the easing of global COVID-19 restrictions. The new normal therefore presents a new opportunity for the petrochemicals sector, which has already been singled out by the International Energy Agency as the main driver of oil demand over the next decade and beyond.
That is why, at Aramco, we remain committed to expanding our petrochemicals business as part of a long-term goal to increase our downstream portfolio and capture more value from the integration and diversification of our operations, in particular in Asia. It is a strategy which inspired Aramco’s recent purchase of a majority interest in SABIC - a deal that ushers in a new era of innovation and value creation across the hydrocarbon chain and will propel Saudi Aramco as a leading global petrochemical supplier for decades to come.