What to expect in the polymer market in 2022?

What to expect in the polymer market in 2022?

As the growing impact of the pandemic changes key aspects of trade and supply/demand imbalances have left their mark on global petrochemical markets in 2021, let's take a look at a Some fundamentals will resonate in the market by 2022.

How could things play out in the economic environment of 2022?

The global economic recovery is expected to prevail throughout 2022, despite tightening monetary policies introduced to curb inflation. However, economists point to a host of headwinds including new variations, inflationary pressures, the possibility of a Fed rate hike, a decline in Chinese assets and geopolitical concerns. can slow down growth.

Asian countries are trying to contain Omicron while this variant is raging has led to a blockade order in China and the reimposition of measures elsewhere to prevent the spread of the virus. This means that the possibility of further supply chain disruptions and shortages will increase with more lockdowns caused by new variants.

The threat of inflation and its impact on exchange rates will also be closely watched. The Fed's potential rate hikes, possibly three next year, are aimed at combating inflation, and the government's plan to cut pandemic-era stimulus not only poses a challenge to the economy. In the long run, the US also risks slowing the growth momentum of emerging economies. This is because higher rates boost the USD and trigger capital outflows and currency fluctuations in emerging markets.

China's post-COVID recovery has been hit by virus lockdowns, energy shortages and Evergrande's debt problems in 2021. Real estate slump and zero-strategy covid could affect growth and shake up global markets.

Logistic difficulties prevail

The supply chain has experienced tremendous disruption throughout 2021 due to a prolonged shipping backlog. Although transportation congestion has eased slightly at the end of the year, transportation costs are still high. Drewry's global standards hit an all-time high in September 2021 after rising more than 500% from the first half of 2020. Freight rates now show an 11% drop from their September peak. but they are still 170% higher than the same period last year.

Port operations and road transport can be easily disrupted if lockdowns and other restrictive measures are in place. According to market participants, the movement of goods is taking longer than usual due to the persistent impact of Covid-19.

An immediate reduction in logistical activity is considered unlikely if countries re-impose restrictions. The logistics industry will need to stretch its limits due to the fact that a long-term infrastructure overhaul takes time, let alone a continued increase in consumer spending.

According to an industry expert who reported to Bloomberg, the long-term solution for logistics is to invest in upgrades at ports, including redesigns to allow larger vessels, additional berth space and more cranes. cranes more while building facilities and inland access points. “The infrastructure bill would be helpful, but the deadline is 10 years, not 10 months,” the expert said.

Oil prices drop

The views on the demand outlook contrast with the focus on the new Omicron variant. The International Energy Agency (IEA) and the US Energy Information Administration (EIA) both reduced their oil demand forecasts through March due to an increase in the number of infections and new restrictions on oil. international travel.

Global inflation and supply bottlenecks, ongoing trade issues and their impact on industrial and transportation fuel requirements are influencing energy estimates. EIA forecasts crude oil prices will fall to 63-68 USD/barrel in 2022.

However, OPEC raised its oil demand forecast for Q1 2022, stressing that the impact of the new Omicron variant on oil demand will be mild and short-lived as the world is already well equipped. more in controlling Covid-19 and related challenges.

OPEC also predicts that oil consumption by China and non-OECD Asian countries will skyrocket. Despite the optimistic OPEC scenario, there are also reports that China's oil consumption will slow down in the first quarter due to stricter lockdown measures and orders. The Winter Olympics, which take place in February, would be a big boost for the economy, if it weren't for the zero-covid policy and entry restrictions. Government plans to reduce air pollution before the event reduced operating capacity and limited oil demand.

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