COVID-19 has affected the buying habits of consumers around the world, changing how they purchase many products, including those based on plastics.
These changes were covered Aug. 11 on "The Post-COVID Consumer," a webinar hosted by Houston-based data firm ICIS.
At the macroeconomic level, global GDP is expected to decline 2.6 percent in 2020 as a result of COVID-related losses, according to Neil Burns, a consultant based in Freehold, N.J. U.S. GDP is on track to be down just a little more than 6 percent, he said, with GDP drops in Europe ranging from 6-10 percent.
Demand for cleaning and hygiene products should be up almost 10 percent for the year, with purchases of luxury items down, Burns added. The "simplification and localization" of global supply chains in response to COVID-19 also could make it more difficult for consumer products companies to develop new products, he said.
The trend toward sustainable products is expected to continue in spite of the challenges of COVID-19, Burns said, especially in western markets.
In commodity plastics, Chemical Data Inc. Vice President Alex Lidback said that resin makers "are fortunate" that a large portion of their sales are into nondurables, since sales into durables, including automotive, are down as a result of the pandemic.
By comparison, he added, demand for food packaging and bottled water has climbed. "The grocery chain is strong," Lidback said. ICIS acquired Chemical Data earlier this year.
Prices for Brent crude oil — which Lidback described as "a price-setting mechanism for plastics and chemicals around the world" — dropped to less than $20 per barrel earlier this year during the pandemic but have rebounded to $45 as of Aug. 13 and should be back to around $60 by the end of 2021, he said.
Polyethylene demand in the U.S. and Canada is recovering from lows earlier in the year. Lidback said new PE capacity additions will need to rely on export sales.
The region boosted PE capacity by just over 12 percent from 2015-19 and will add almost 10 percent from 2019-22, fueled by the availability of low-priced shale oil and gas feedstock. But domestic PE demand grew only 0.5 percent and 1.2 percent in those same time periods.
"There's 20 billion pounds of excess [PE] capacity based on domestic demand growth," Lidback said. "The new capacity was built for exporting.
"This has been the plan all along. The only way to sustain high utilization rates is exporting," Lidback added.
PE exports from North America began to increase in 2015 and have trended higher every year since then. By 2022, more than 40 percent of PE made in North America will be exported. "When you export this much, the international market has a major impact on domestic prices," Lidback said.
The U.S./Canadian PET bottle resin market also has become very tight in 2020, as COVID-related packaging demand has surged and less import material is available because of recent anti-dumping actions.
A potential new virgin PET plant in Corpus Christi, Texas, also has been delayed until the cost of the project can be justified, Lidback said. As a result of these factors, North American PET operating rates should be elevated at least through 2023, he added. The availability of recycled PET also has been tight, as bottle collection has been hindered by the pandemic.