Winter is coming, and the epidemic intensifies the crisis of chemical supply in Europe

Recently, the supply chain crisis caused by the new crown pneumonia epidemic has plagued the European chemical industry
.
Especially in the past November, weather problems, the new crown pneumonia epidemic and the discovery of Omicron strains in many parts of Europe have exacerbated the shortage of chemical supplies in Europe, which in turn drove the prices of European chemicals to rise further
.
Industry insiders say it's unclear whether the mutant "Omicron" is more transmissible than previous strains, but the market is bound to be plagued by the recent surge in infections
.
The government's response could further exacerbate supply chain problems
.
At present, despite the surge in product prices, the demand remains high, and the trend of deepening the chemical supply crisis in Europe is obvious
.

The epidemic situation is not optimistic

After entering the winter, the number of confirmed cases of new coronary pneumonia in Europe has surged
.
At present, infection rates have risen sharply in most of Europe, with daily infections exceeding 10,000 per million people in Hungary, Austria, Belgium and the Netherlands, and some countries have had to restart lockdown measures
.
Since Slovakia and Austria began national lockdowns in late November, almost all European countries have reimposed national lockdowns to control the spread of the virus
.
Analysts at ICIS said that while vaccination rates were much higher than in 2020, the number of new cases had overwhelmed the European healthcare system
.
If the situation does not improve, Europe will inevitably impose a wider and stricter lockdown
.
In addition, the spread of the "Omicron" strain in Europe is not optimistic
.

The blockade is bound to have a detrimental effect on the European economy
.
To make matters worse, the current European lockdown is less effective than it used to be, according to an analysis by ING
.
This means that the lockdown is likely to take longer and will likely affect the gross domestic product of European countries by the end of 2021 and next year
.
"The new wave of Covid-19 and the surge in infections have exacerbated already existing headwinds, such as higher energy prices and supply chain crises," said ING senior economist Bert Colleon.
"
Governments appear to be underestimating the fourth wave of the virus.
" The impact of the current under-vaccination rate could have serious implications
.
”

Procurement difficulties affect downstream

In Europe, supply chain problems in the petrochemical industry have affected the recovery process of the manufacturing industry
.
In the context of difficult procurement of chemical materials, soaring input costs and prolonged delivery cycles, the growth of the European manufacturing sentiment index has gradually slowed down
.

Currently, the auto industry, which accounts for about one-fifth of chemical demand, is still battling shortages of intermediates and chronic shortages of computer chips, ICIS said
.
UK trade data showed car production fell in October to its lowest level since the 1950s
.
In a monthly survey by the IFO Economic Research Institute in Munich, Germany, 90% of auto industry respondents pointed to delays and difficulties in obtaining parts
.

During the pandemic, European petrochemical distributors reported that many downstream industry players placed multiple orders for the same batch of materials in anticipation of shortages or logistical bottlenecks affecting some orders
.
Traffic jams, high pricing and numerous planned and unplanned shutdowns have pushed inflation to levels not seen in years
.
Inflation in Germany came in at 5.
2% in November, and is forecast to hit another record high in December
.
Despite higher input costs, demand remains strong, with further price hikes across European manufacturing
.
"Never before have so many companies announced higher prices," said Klaus Wallabe, head of IFO investigations
.

Tight logistics and high freight

Disruption in the transport industry has deepened as countries begin to impose new lockdown measures
.
At present, the cost of European road transport, sea and air transport is still high
.
ICIS statistics show that before the "Omicron" strain was discovered, the new wave of the epidemic in Europe had caused the cost of transportation to and from Europe to soar, even higher than the price during the outbreak, and was already lower than the average price before 2020.
The price is several times higher
.
From Nov.
8 to Nov.
22, the cost of shipping a 40-foot container from Asia to Europe increased by nearly $8,000, from just over $15,000 to around $23,000
.

When it comes to road transport, a shortage of trucks and lorry drivers has caused major problems in the UK, Germany and Poland, and when combined with the Christmas holiday factor, many European petrochemical buyers have given little hope that goods will arrive this year
.
The current standoff could result in better-than-expected winter petrochemical demand, market players predict that a shortage of trucks and drivers could prompt buyers to increase orders to ensure materials arrive in time for the holidays
.

In addition, weather issues have further strained logistics
.
Storms in parts of northern Europe at the end of November, as well as a drop in the water level of the Rhine due to unusual drought, have adversely affected logistics
.
It is reported that due to insufficient rainfall on the key chemical transportation trunk of the Rhine, the local area has reduced the proposed ship berthing capacity to 40%~60%
.
"Through November, we had to reduce our capacity
," said a market source who works in river transport
.