SIBUR: auto and construction industries will recover to pre-crisis levels no earlier than 2022

SIBUR: auto and construction industries will recover to pre-crisis levels no earlier than 2022

SIBUR: auto and construction industries will recover to pre-crisis levels no earlier than 2022

Some of the consumers of the petrochemical industry – the automotive and construction industries – will recover to pre-crisis levels no earlier than 2022, as the population's solvency is declining, said Ksenia Karetina, head of the Sibur Holding analytical center, during the conference “Argus Petrochemicals 2020: CIS and Global Markets”. According to her, the auto industry takes about 5-10% in the structure of consumption of petrochemicals, and construction – up to 15%. At the same time, the drop in demand for the auto industry occurred even before the COVID-19 pandemic due to the tightening of environmental regulation in Europe. Now the same is happening in China, so regulation in China will be in the field of supervision of petrochemists in the next few years.

At the same time, Karetina said, the industry was seriously affected by the pandemic, since factories were closed, but now China is emerging from the crisis, and with regard to Russia and Europe, everyone is waiting for quarantines to be reintroduced, so there is a fairly high uncertainty of how the auto industry will be restored. “Of course, incomes of the population will determine, including the pace of economic recovery, and, accordingly, the level of sales in the automotive industry,” said the SIBUR manager.

According to her, much will be determined by measures to support the petrochemical consumer industries, in particular, the automotive industry in connection with environmental issues.

In 2020, Karetina noted, the fall in the auto industry is expected at the level of 15-20%, and only by the end of 2022 the industry can reach the level of 2019. At the same time, she noted, the growth rates will further be lower than the pre-crisis indicators. “The growth rates of sales will still decline, in all industries – both chemical and others. We see that growth rates will most likely not return to pre-crisis indicators, because our population's ability to pay is declining quite actively,” Karetina said. According to her, if in the period from 2008 to 2016 the use of polymers in cars grew quite seriously, “at the moment we already understand that the amount of polymers in cars is not growing in our country, it remains constant.” According to Karetina, petrochemists need to look for growing niches of consumption. In the construction industry, she noted, a return to pre-crisis levels is also expected in 2022.

“Construction is an industry that falls immediately and strongly when a crisis occurs, and grows slowly and for a long time. By the time of the pandemic, construction was also not growing very much, it was also declining, but COVID still made adjustments, because the restrictions that were introduced, they had a serious impact on the industry, “said the SIBUR manager. “Of course, we understand that the fall in the income of the population again affects this recovery, that is, the growth rates of the recovery, they are primarily determined by the income of the population and measures of state support,” Karetina said.

According to her, the fall in the construction industry will be about 4% in 2020. “This is much less than the auto industry, but the construction is inert, so we will go out to smaller numbers longer. And if we see, for example, growth rates of 6-7% on average in 2014-2018, now we already see in the forecasts , somewhere on the order of 3% in 2022-2029, that is, again, there are no significant growth rates in the industry.It is natural that we are very seriously waiting for how the second wave of coronavirus will pass, because this will have an impact on the industry's recovery “, – she added.

Karetina also noted that it is possible to stimulate the demand of the construction industry in the petrochemicals, explaining the advantages of polymers over traditional materials. In her opinion, this fits well into the concept of a circular economy. “That is, it means reducing waste generation, and reducing energy use, and reducing emissions,” the SIBUR manager said.

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