In the early time of the Covid-19 crisis in March 2020, our customers immediately raised the question how solid the supply chains were and whether supply would remain reliable in the future. At that time, irrespective of discontinuity of supply in many industries, e. g. the automotive industry, supply with PE raw materials remained secure, since the European plants continued to operate on a normal level and also because demand from some plastics processors had dropped. Twelve months later, however, things look quite different.
Looking back, it is obvious how, in the aftermath of Covid-19, a delayed significant supply bottleneck has now occurred in 2021. Owing to the reduced demand for PE raw materials in some industries at the onset of the Covid-19 crisis, the PE manufacturers’ warehouses were quickly full around mid 2020. So that they did whatever they could in the coming months to reduce their stocks. At the same time, the Covid-induced lockdown has resulted in a reduced demand for gasoline and diesel, and since the ethylene precursor, naphtha, is generated as a by-product in refineries, less gasoline also meant less ethylene and thus also less polyethylene on the market. As a result, polyethylene prices quickly began to stabilise again in 2020 after a temporary drop in view of full warehouses.