Beijing – The effects of coronavirus could affect polyurethane companies' performance in the first quarter and through the year, according to a Chinese PU materials maker.
'Depending on how long the outbreak lasts, we estimate that the PU industry will show a slight drop over the year, at a smaller rate compared with China’s overall economy,' said OSiC Performance Materials.
The first quarter will be under strongest pressure. Manufacturers can resume production with strict prevention measures, but they will have to run at a low utilisation rate if consumption does not return to normal.
PU materials’ most significant downstream categories, such as foam, resin, shoe soles and coating, largely rely on consumption by end consumers, OSiC added. 'Worried consumers will delay or cancel their plans to purchase cars, to remodel their homes or to go shopping in a mall,' it said. 'The demand in home furnishing, construction and automotive segments will fall.'
The company expects the situation to rebound once the outbreak settles down, making up for some of the declin. The outbreak of the novel coronavirus, and also a recent outbreak of swine fever, will also raise demand for some PU products, such as elastane, which is used in face masks, and rigid foam used in pig farms.
It helps that Hubei, the province most affected by the outbreak, is not a major regional player in PU industry’s production or consumption, OSiC added.
It still anticipate stable exports for the sector, with the authorities expected to roll out preferential policies for exports and also tax cuts, monetary easing as well as investment and consumption stimulus.
The outbreak may also speed up the sector’s structural transition process, OSiC added.