French chems assoc warns of 'catastrophic' slump in demand

06 June 2003 17:51  [Source: ICIS news]

PARIS (CNI)--European olefins demand in May and June is "catastrophically lower" than usual, according to Andre Renoux, chairman of French petrochemicals group Syndicat de la Chimie Organique de Base (Scob).

Renoux, who is in charge of the Basell joint venture steam cracker at Berre in southeast France, said cracker profitability was very poor in the first half of this year and he is banking on a resumption of stock rebuild and demand in the second half. 

He noted that in the current unstable economic environment and amid intense worldwide competition in base chemicals, upstream synergies with refining were being maximised in France, both with regard to hydrocarbons and infrastructure.

Renoux, who was speaking at Scob's annual press conference on Thursday, noted that the French petrochemical industry's priorities of safety, sustainable development and high added value polymers should help it rebound as soon as the economy recovers.

On performance in 2002, Renoux said: "Last year was one of the most disappointing years in the last decade for France's petrochemical industry with a persistent margin squeeze."

He added: "The only sector which posted spectacular recovery was aromatics."

While EU base organics grew 4% in volume in 2002 over 2001, France only posted a 0.6 % rise due to scheduled and unscheduled cracker shutdowns. Lack of demand, once stocks were rebuilt, caused operating rates to reach a low in November and December.

French ethylene production rose 1% to 2.85m tonne while in the rest of Europe output was up 2.7%, partly on increased demand for ethylene oxide (EO). Refinery PP accounted for 22% of total PP production in France, down from 25 % in 2001 and against a 28 % EU average.

Due to technical problems, France's benzene production slipped 16% compared with a 0.5 % increase in the EU although margins were improving. On the other hand, France's orthoxylene (OX) and paraxylene (PX) production increased 30% compared with a 7% OX rise and a PX stagnation across the EU.

Renoux said investments in the European Union (EU) base organics chemicals sector between 2003 and 2008 would not exceed 2.5% of worldwide investment.

The financial resources available only allow for modernisation projects or limited capacity increases, he explained .

At the press conference, industry representatives from Atofina, Basell, BP Chemicals, Exxon Chemical and Shell Chimie said the nationwide strikes this week over the French government’s pension reform plans have hit chemicals, especially in the transport area.

Sites in Fos, Berre and Lavera in southeastern France were especially affected by actions in the Marseille area, as ships were being delayed from discharging. A further strike is scheduled for 10 June.

By: Doris Leblond
+44 20 8652 3214

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