THE EFFECTS OF THE CORONA VIRUS ON THE PLASTIC INDUSTRY
With the corona virus epidemic exceeding the borders of China and spreading rapidly on a global scale, a demand-driven decline has been observed in the manufacturing industry since mid-March.
Automotive companies have suspended production on a global basis and production in the automotive sector has come to a standstill. In almost all European countries, people are restricted from going out to the streets.
People have postponed their demands for vehicles with the concern to continue their lives and to meet their basic needs. When Turkey is a European country of the main markets of the automotive industry and about 75% of the production made on this issue in Turkey considered that sold in the European market, to stop the production of OEMs in Turkey or it is estimated will take several months of working at low capacity.
The plastics industry, one of the main suppliers of the automotive industry, has been adversely affected by this development. The plastic consumption of the automotive industry increased to 6.8% in 2019. From this point of view, companies that produce finished and semi-finished products for the automotive industry will suffer a major job loss during this period.
The packaging industry generally produces industrial and food packaging. Although there has been a decline in the industrial sector due to the slowdown in production, a significant increase has been observed in the disposable packaging and film sector, which appeals to the final consumer. With the spread of the epidemic, the critical role played by plastic packaging in terms of hygiene and public health has once again emerged. Accordingly, the demand for all these products has increased. Especially after the rapid increase in the demand for cologne and antiseptic solution bottles, companies in the sector have difficulty in raising production.
There has been a rapid increase in the demand for plastic products in the medical sector. All companies have started to work with high capacity in order to meet the need for masks and gloves. Even if there is no clear prediction about how long the epidemic will continue, it is estimated that the demand increase in the medical sector will not decrease in the short term.
Firms operating in the durable consumer goods, agricultural plastics, carpet and textile sectors have reduced their production due to order cancellations. It is known that if export markets shrink and global demand continues to decline, the loss of production in these sectors will continue in the near future.
In addition to the decrease in demand after the epidemic, it is predicted that the oil barrel prices, which declined due to the failure of Russia and OPEC to reach an agreement, will continue to decrease for a while. Accordingly, it is estimated that there may be a limited decline in raw material prices.
It is possible to summarize the main problems that arise in the plastics industry with the epidemic as the disruption of the supply chain, order cancellations and an increase in the risk of collection. It is estimated that all these problems will cause a decrease in employment in the sector.
That started in mid-March with the relevant measures of the corona virus outbreak in Turkey's manufacturing industry has had a limited impact on the virus in the first three months of 2020. The negative effects of the virus on the manufacturing industry started to be felt especially since April, and the negative impact in the first 3 quarters was limited.