BEIJING—The effects of the coronavirus could affect polyurethane companies' performances in the first quarter and through the year, according to a Chinese PU materials maker.
"Depending on how long the outbreak lasts, we estimate that the PU industry will show a slight drop over the year, at a smaller rate compared with China's overall economy," said OSiC Performance Materials.
The first quarter will be under the most pressure. Manufacturers can resume production with strict prevention measures, but they will have to run at a low utilization rate if consumption does not return to normal.
PU materials' most significant downstream categories—such as foam, resin, shoe soles and coating—largely rely on consumption by end consumers, OSiC added.
"Worried consumers will delay or cancel their plans to purchase cars, to remodel their homes or to go shopping in a mall," the company said. "The demand in home furnishing, construction and automotive segments will fall."
The company expects the situation to rebound once the outbreak settles down, making up for some of the decline. The outbreak of the novel coronavirus, along with a recent outbreak of swine fever, will raise demand for some PU products such as elastane, which is used in face masks, and rigid foam used in pig farms.
It helps that Hubei, the province most affected by the outbreak, is not a major regional player in PU industry's production or consumption, OSiC added.
OSiC still anticipates stable exports for the sector, and believes authorities will roll out preferential policies for exports and tax cuts, monetary easing, investment and consumption stimulus.
The outbreak may also speed up the sector's structural transition process, OSiC added.