27 October 2003 16:26 [Source: ICIS news]
MONTE CARLO, Monaco (CNI)--The European chemicals sector offers limited growth and if its old, outdated production infrastructure doesn't become more “joined up” it faces the threat of closure from overseas competition, delegates heard here today at the 30th European Petrochemical Association (EPCA) logistics meeting*.
Werner Pratorius, president of BASF's petrochemicals division, suggested delegates should ask themselves if the 45th EPCA logistics gathering in 2018 might - if present trends continued - convene either in the Middle East or Asia.
Pratorius said: “It is time we stopped talking and started acting.”
He called the European chemicals sector a fragmented landscape without any buffering capabilities to cope with short-term fluctuations in demand, and urged the industry to consolidate. Pratorius added that Europe had to build world-scale plants in integrated production clusters with high connectivity and buffering systems through investments and operations shared with logistics providers.
Supply chain costs have become a significant factor in the European chemicals industry and, in some cases logistics costs exceed manufacturing costs (excluding raw materials), he said.
Pratorius said chemicals producers and logistics providers had to become more flexible and customer-oriented, with more transparent supply chains, for Europe be able to take advantage of its technological leadership. Logistics companies should be key providers and partners for the chemicals industry, he said.
He predicted that over the next 15 years the flow of petrochemicals will change as production and feedstock cost vary geographically. Asia has already developed into a production powerhouse and high-consumption market while the Middle East continues to expand and take advantage of its cheaper feedstocks.
Pratorius added that Asia was expected to become a much larger consumer of ethylene, for example, and it will be supplied increasingly from the Middle East. He said that the Middle East itself would produce increasing amounts of most downstream petrochemicals that will be moved primarily to Asia and western Europe.
Asia is the “infinite sponge” as imports would continue to be essential to satisfy demand. “Despite large investments – around $20bn (Euro16.9bn) underway – no self sufficiency will be seen until 2015 in Asia,” he said.
* The EPCA logistics meeting continues on Tuesday.
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