Fitch Ratings on Sunday said the coronavirus would continue depressing petrochemical demand in end-use markets, posing margin pressure for South and Southeast Asian petrochemical companies. While demand is expected to gradually recover in 2021, margin recovery will be capped over the next two to three years by the planned startups of additional capacities.
Fitch said margin pressure would vary depending on the petrochemical products. Petrochemicals used for packaging in the food and beverage industry are likely to face a milder margin compression than petrochemicals used in the automotive, construction, aviation, electronics, and appliances. The margin recovery will also be varied across companies. Companies with diverse product offerings and integrated refining will recover faster than their stand-alone peers.
Fitch maintains Stable rating Outlooks on India’s Reliance Industries, Indonesia’s Chandra Asri Petrochemical, and Thailand’s IRPC. Meanwhile, it gives Negative rating Outlooks on Thailand’s PTT Global Chemical and HMC Polymers.
