Covid-19 Had a Negative Impact on the Plastics Industry

According to a report published by PAGEV, Turkey's plastic products production in the first half of 2020 declined by 4.8% in volume to 4.8 million tonnes and by 7.9% in value to USD 16.6 billion compared to the first half of 2019. The Turkish Plastics Manufacturers Research, Development and Training Foundation (PAGEV) continues to monitor the pulse of Turkey's plastic sector through its published reports. PAGEV's recently released January-June 2020 period report showed that the impact of coronavirus was felt intensely in the first half of the year. The decline in domestic and external demand caused plastic products production in the first half of 2020 to fall by 4.8% in volume to 4.8 million tonnes and by 7.9% in value to USD 16.6 billion compared to the first half of 2019. It is estimated that by year-end, production will reach 8.9 million tonnes with a 3.5% volume decline and USD 30.9 billion with a 5.6% value decrease. Capacity utilization rates in the sector, which had recorded increases in the first quarter compared to the same period of the previous year, declined significantly in the second quarter compared to the second quarter of 2019. Thus, capacity utilization in the plastic sector, which stood at 72.1% in the first 6 months of 2019, declined by an average of 3.6 points to 68.5% in the first 6 months of 2020.

Exports increased 5.2% in volume while declining 7.8% in value during the first half

The effects of the Covid-19 pandemic in the plastic products sector were also reflected in export figures. The sector's first-half export performance compared to the same period of 2019 reached 1.82 million tonnes with a 5.2% volume increase and USD 2.4 billion with a 7.8% value decline. The plastic sector, which exports to nearly 200 countries, exported the most plastic products to the following top five countries during this period: Iraq, Germany, the United Kingdom, Israel and France.

Machinery and equipment investments increased 27% in the first half, domestic machinery failed to secure desired share

Machinery and equipment investments in the plastic sector reached USD 387 million in the first half of 2020, increasing by 27% compared to the first half of 2019. The rising demand for packaging was particularly influential in this investment increase. Of the 4.8 million tonnes of total plastic products production in the first half of 2020, packaging accounted for 1.9 million tonnes. While 66% of the investments in question were met with imported machinery, the domestic machinery sector did not capture the desired share of this growth. Imported machinery investment rose from USD 174 million in the first 6 months of 2019 to USD 255 million in the first 6 months of 2020. During the same period, domestic machinery production totaled USD 132 million.

Contraction in domestic and external demand continues

Plastic products domestic market consumption in the first half of 2020 fell to 3.77 million tonnes with a 7.5% volume decline and to USD 4.16 billion with a 10.9% value decrease compared to the same period of the previous year. It is estimated that the continued negative impacts in many sectors using plastic products, particularly construction, automotive and tourism, will reduce plastic products domestic market consumption by year-end to 6.82 million tonnes with a 3.1% volume decline and to USD 8.33 billion with an 8.4% value decrease compared to 2019. Raw plastic material imports in the first half of 2020 declined by 4.2% in volume to 3.9 million tonnes and by 8.9% in value to USD 4.3 billion compared to the same period of the previous year. The plastic products sector posted a USD 1.1 billion foreign trade surplus in the first half of the year. A 7.8% decline occurred in the foreign trade surplus compared to the same period of the previous year. Evaluating the first-half data, PAGEV Chairman Yavuz Eroğlu stated: "Positive developments were seen in plastic products production in the first quarter of the year. However, although the coronavirus impact that began to be felt in March peaked in April and May and showed signs of some recovery in June, the figures trended downward.

The Covid-19 pandemic confirmed the vital importance of plastics in many areas from hygiene and medical to food packaging.

With the coronavirus, there was an increase in masks, gloves, face shields, diagnostic kits, disinfectants, cologne bottles, food packaging and single-use products made from plastic raw materials to maintain hygiene. During the Covid-19 period, single-use plastic consumption such as forks, spoons, knives and cups increased by 25%. The decline in the plastic sector during the pandemic was not larger thanks to increased consumption of food packaging, cosmetics and disinfectant packaging, hygiene products and single-use plastic packaging. Although almost all indicators trended downward in the first half of the year, the 27% increase in machinery investments stemmed from a better understanding of the role plastics played in hygiene during the pandemic and consumers' interest in such plastic products. Warnings came from Ministries to prefer single-use products in workplaces to reduce infection risk. The Ministry of Health emphasized the necessity of using single-use products in its Safe Return to Work Guides prepared during the return-to-work process. During the Covid-19 period, with newly implemented regulations, vegetables and fruits in marketplaces and supermarkets can no longer be hand-selected openly and are now presented in plastic bags. Bread is no longer sold without packaging. This decision by the Ministry of Trade is an important step for public health. The Ministry of Family, Labour and Social Services also announced that factory meals must be served with single-use items. Single-use plastics are gaining importance as a necessity for protecting human health and consuming food hygienically. As PAGEV, we have established meaningful cooperation with the Ministry of National Education to meet the increasing demand for single-use products. Under this scope, volunteer teachers at PAGEV Gebze Vocational and Technical Anatolian High School and PAGEV Küçükçekmece Plastics Technology Vocational and Technical Anatolian High School are producing single-use plastic spoons, forks and knives needed by our country.

"In addition to this project where we say 'let there be a spoon in our soup,' we are contributing to this struggle by supporting the production of 300,000 face shields monthly at plastic vocational high schools to be designated by the Ministry of National Education and sending them to places where needed."

Stating that the path to emerging from the pandemic with minimal damage lies in keeping production running, Yavuz Eroğlu said: "To prevent production, export and employment losses, the factors that create pressure on production costs must be eliminated and energy costs necessary for competitive production must be reduced. During the months when industrialists faced difficult times due to the sharp decline in domestic and external demand caused by Covid-19, astronomical electricity bills made matters worse. We have managed to keep our objections regarding high electricity prices stemming from YEKDEM on the agenda for a long time and made our voice heard. We support renewable energy, but we say that it is no longer sustainable for the burden of renewable energy incentives to be placed on industrialists' shoulders. We view the announcement by our Energy and Natural Resources Minister Fatih Dönmez last month that they are working on a new model for YEKDEM as a positive development. We are ready to contribute solution-oriented approaches to the new regulations to be made regarding YEKDEM," he said.