EBITDA of chemical industry will drop by 10% this year

According to a recent report released by Moody’s Investors Service, a credit rating agency, the average EBITDA of chemical enterprises is expected to decline by more than 10% in 2020 due to the deterioration of the economic outlook. Moody’s predicted that the GDP of the United States and the euro area would decline, and the economic activity in the second quarter would decline even more, because of the sharp decline of the new crown epidemic.

Moody’s said that the continuous decline of international oil price will flatten the global chemical cost curve and make some petrochemical enterprises lose the advantage of raw materials when the oil and energy prices are high, thus increasing the operational risk. Petrochemical producers in the Americas also face risks in the oil market.

However, some segments may have better conditions to withstand the storm. For example, coating manufacturers will benefit from raw materials with cost advantages. Moody’s said that many companies have begun to assess the potential impact of the first half of this year, and many have withdrawn their business guidance for 2020. At present, most companies have not quantified the impact of the epidemic. The resumption of production in China in March and early April is encouraging, but demand for end-use chemicals in China remains uncertain and export demand remains subdued.