The U.S. chemical industry faces significant challenges due to the COVID-19 pandemic, with the American Chemistry Council projecting a decline in GDP by 4% in 2020 and potential job losses totaling 28,000. Despite these setbacks, certain sectors, such as PPE production and cleaning chemicals, are experiencing increased demand. Additionally, major investments continue, like ExxonMobil's $10 billion chemical complex in China, highlighting ongoing opportunities in the industry.

1. CoronavirusMaySlashU.S.GDPby4PerCentin2020,ChemicalIndustryUnderPressure
Key Headlines
• WTI Crude Prices Rebound By 30.9 Per Cent for June Contacts
• Petrochemical Feedstock Prices Record a Significant Drop Due to Weakness in Upstream Values
• Four Ethanol Plants Idled in Minnesota, U.S. Due to Demand Destruction
• Double Whammy of Covid-19 on the U.S. Chemical Industry, 5.1% of the Workforce May Lose Jobs in 2020
• ExxonMobil Starts Construction of a Worth $10 Billion Chemical Complex in China
• India’s Tiruppur Unit to Grab Investment Opportunity in the PPE Sector
Asia Pacific Chemicals Pricing (Key Products)
• Propylene: Propylene priced tumbles in Asia on collapse in crude oil value and slackened demand of the product
from major consuming segments. Propylene settled at $610/ tonne FOB Korea, registering a fall of $10/tonne
from previous revision.
• Phenol: Phenol prices edged higher in Southeast Asia on recovery in demand from rubber industries as many
industries resumed production in plants after ease in government restrictions to combat virus. Phenol climbed
to $700 per MT, up by $15/tonne from previous revision.
• Styrene: Styrene prices witnessed a downtrend on Wednesday, influenced by slump in prices of its feedstock
and reduced offtake from downstream sectors. Styrene prices were pushed down to $510/tonne FOB Korea,
with a fall of $45/tonne.
• Benzene: Benzene prices remained in doldrums and settled at $315/tonne, down by $40/tonne on dwindling
upstream value and weak demand from downstream industries.
Crude Oil Scenario
On Wednesday, Brent Crude touched $15.98 per barrel, its
lowest since June 1999 and by 14:58 GMT, it rose by 8.4 per
cent, to $20.96 a barrel. WTI crude futures for June delivery
increased by 30.9 per cent, to $15.14 a barrel after ruling a
negative territory on Monday. Panicking traders had to let oil pass off their hands as players had reached maximum of
their storage capacities. Past few days have been the most unfavorable ones in the crude oil history when the demand
destruction and swelling inventories pressurized the sector in combination. However, analysts eyed on some optimism
after Saudi Arabia on Tuesday declared its agreement towards taking extra measures with other middle eastern
producers agreeing in consent. The U.S. and other countries also promised to pump less this month.
Index Units Prices
WTI Crude Oil USD/bbl. 13.78
Brent Crude USD/bbl. 20.86
Natural Gas (U.S.) USD/MMBtu 1.939
Edition: 23rd April 2020 #TheChemAnalystExpress

2. Exclusive News & Analysis
U.S. Chemical Industry Outlook “Gloomy” As Coronavirus Cases Cross 8.2 Lakh in the Country
As per the recent interim updates by the American Chemistry Council (ACC), there is significant uncertainty in the
projections of the U.S. chemical industry as it analyzes the potential impacts of Covid-19 which has caused indefinite
halt in the country’s manufacturing activities and muted trading. ACC projects the world trade to plummet by 10.5%
this year as the pandemic brings a “perfect storm” to the global economy with U.S. experiencing the hardest blow as it
reports the spread of the virus in more than 8.2 lakh people, as on Wednesday, 22nd
April 2020. It is being feared that
if lockdown restrictions are not eased before the end of Q2 2020, it would result in a sudden and severe collapse in
global economy sliding it into the steepest recession since the 1930s.
According to the ACC update, following factors have put an undue pressure on the U.S. chemical sector which might
take a huge toll on the country’s economic growth:
1. The year started with muted trade activity as the Trump administration revised trade agreements with China.
2. Oil prices plummeted to reach a negative territory this week, putting the shale-gas producers at risk. The shale
gas sector powering the U.S. chemical exports has evaporated.
3. A decline in crude oil production could increase the natural gas and natural gas liquids (NGL) prices, as if refiners
induce production cuts this would mean lesser associated gas produced. This may further affect the U.S.
petrochemicals sector.
ACC reports that U.S. chemical volumes are expected to fall sharply in 2020 before showing a further rise in 2021. The
table shows ACC predictions regarding chemical imports and exports in the two years relying on some baseline
scenarios.
A sigh of relief for some chemical sectors
• In response to the pandemic, some chemical
producing sectors are witnessing a boost with
strong focus on the chemicals which are being
popularly used in the fight against the virus. These
include synthetic materials for personal
protective equipment (PPE), ingredients for
cleaners and disinfectants, and plastics used in
medical equipment such as ventilator machines.
• Specialty chemical player Stepan has reported a sudden jump in demand for surfactants and other cleaning
chemicals. Similarly, DuPont is assuming that high sales of PPE is likely to boost its first-quarter earnings.
•
Note: In its release, ACC has stated the afore mentioned points by relying on a baseline scenario according to which the
U.S. COVID-19-related restrictions are lifted before the end of Q2 2020. ACC also sketched a “pessimistic” scenario
under which U.S. restrictions are extended till Q4 2020.
2020 2021
Chemical
Volumes
(-)3.3% (+)5.2%
Basic Chemical
Volumes
(-)2.9% (+)6.7%
Chemical
Shipments
(-)10.0% (+)7.8%
Source: American Chemical Council Interim Report
Future Risks
• ACC expects that the chemical job losses could total 28,000, or 5.1% of the workforce, in 2020. The job cuts
would put a big halt on the industry’s 3-year run of job expansion. The cuts would be distributed among
production, R&D, managerial & administrative roles, and overall business investments.
• The ACC report projects U.S. GDP to fall by 4.0 percent in 2020 before rising 4.0 percent in 2021. Consumer
spending will decline by 4.6 percent in 2020 before rebounding 4.4 percent next year. Economy-wide
business investment is expected to decline 9.7 percent in 2020 before showing 3.0 percent growth in 2021.
Table1: Rise and Fall in U.S. Chemical Volumes (2 Year Forecast)

3. Industry Research
International Plant Shutdowns
• Ethanol Plants Idled on Demand Loss Amid Coronavirus
Four ethanol plants in Minnesota, U.S have been idled due to slackened demand of the product as the transportation
and travel activities are on halt amid Covid-19. Since 1st March, around 30% of 2014 ethanal plants in U.S have been
idled while remaining are facing slump in production. U.S biofuel industry has witnessed a steep fall with production
hitting a record low.
• Indian Point Nuclear Plant to Shut One of the Reactors
Indian Point Nuclear Plant, a nuclear plant station in New York comprising three units, has announced the shutdown of
Reactor 2 as an initial step by plant’s owner, Entergy to prepare for the decommissioning of the complete plant by next
year. The company will be shutting down reactor 2 by the next week of April, while the shutdown of Reactor 3 is
scheduled for next year.
Global Plant Resumptions
• Ube Industries to Resume the Production of a Chemical Used in an Antiviral Drug
Ube Industries, a Japanese Chemical company, is planning to resume the production of a chemical compound used to
produce an antiviral drug for the treatment of Coronavirus. The company has announced to begin manufacturing of this
drug by July at its plant in Yamaguchi Prefecture. Ube halted the production of this chemical compound in 2009 but is
planning to restart it on request from pharmaceutical industries.
• Apollo Tyres to partially restart operations at Kerala Plant
Apollo Tyres, a downstream industry of elastomer has announced the re-start in operations of its manufacturing plant
in Kerala, on 22 April. The decision has been taken after the government relaxed restrictions on industrial activities in
order to pave the track to better industrial scenario and to contribute in stabilizing the economy. The production in this
plant was suspended on March 24 in compliance to the government initiatives taken to contain the spread of
coronavirus in India.
Major Project Delays
• Shell postpones North Sea Project, Slashes Spending
In response to the historic plunge in the crude oil on Monday, Royal Dutch Shell PLC has decided to postpone its $1
billion Jackdaw natural gas field development project in the North Sea. The decision has come out of the company’s
dire concern as several energy players are cutting their expenditures due to plummeting crude demand. This is the
second project that Shell has delayed in the region after the company delayed the development of the Combo field
northwest of the Shetland Islands.
Strategic Investments
• Mitsui Chemicals to Establish a New Plant for Cyclic Olefin Copolymers
Mitsui Chemicals, a renowned chemical company in Japan has announced to establish a new plant for APEL series of
Cyclic Olefin Copolymers in Takaishi. This new plant is being built in response to the rising demand of its major
application that is, smart phone camera lens. The company has announced to begin the production by the end of this
month, which is anticipated to achieve completion by March 2022.
• India’s Tiruppur Unit Seeks Opportunity in PPE Business
Hit by the storm of Covid-19 due to lack of export orders or untimely cancellations due to nationwide lockdown,
South India’s cotton knitwear cluster, is aiming to step up the production of personal protective equipment such as
masks and bodysuits in an effort to fulfill the need of the hour during covid crisis. With about 200 units working
towards manufacturing the personal protective equipment (PPE) , the associated industry body, Tiruppur Exporters

4. Association is eyeing on a $2 billion worth business opportunity this fiscal year if they are get the required technology
and exports restrictions are removed. The association is working strenuously to improvise its products so that they
meet the global standards and has provided jobs to almost 8 lakh people in these crucial times, half of which are
migrants. As of now, the company has been manufacturing masks and bodysuits, but in about the company is 15-20
days is all set to manufacture PPE kits.
• ExxonMobil Starts Construction of a Great Chemical Complex in China
On Wednesday, the oil and gas giant ExxonMobil broke the ground towards construction of its completely funded
chemical complex in Huizhou located in southern China's Guangdong Province. The complex holds a total investment
of about USD 10 billion and will be built in two phases. The first phase with a 1.6 million tonne-per-year ethylene
cracker and downstream production equipment is expected to be completed by 2023 followed by the start second
phase construction. The first phase would be requiring an annual operating income of USD 5.5 billion. China offers a
long-term strategic platform to ExxonMobil and the project reflects China's growing commitment to FDI
Latest Technological Investments
• Recycling Technologies Chooses the First Site for Setting Up European Plastic Chemical Recycling Machine
Recycling Technologies, a plastic recycling technology provider, has come up with a technology which can convert
recycled plastic waste into a valuable feedstock for producing a new plastic. The RT7000 is a scalable patented
technology which can recycle low-grade plastic trash into a feedstock trademarked as Plaxx, for new plastic
production. The company has decided to set up its first European site for recycling plastic at Brightlands Chemelot
Campus. Brightlands Chemelot Campus is a research and technological growth hub, located near the main
petrochemical hub in Europe accounting for 40% of Europe’s chemical industry. This technology creates a way for
obtaining value from plastic waste which faces recycling issues through general mechanical techniques and is
therefore discarded through landfilling or exports.
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