Hard times ahead for some PP plants - consultant

27 March 2008 23:28  [Source: ICIS news]

HOUSTON (ICIS news)--West European and North American polypropylene (PP) producers should be ready to close unprofitable operations as an unprecedented level of global capacity builds up, an industry consultant said on Thursday.

“In 2007, about 200,000 tonnes of PP capacity were shut down in West Europe and North America. In 2008, almost 1m tonnes are expected to come offline, and the trend is expected to continue in the following years,” said Esteban Sagel, CMAI director - polyolefins, North America.

Sagel told attendees at the CMAI World Petrochemical Conference here that Western European and North American producers also should be prepared to lose their export position. North American producers have recently depended heavily upon exports to bring balance to their domestic market, he explained.

“Your future plans should include contingencies to deal with the potential that exports may not be there to sustain your operating rates,” he said.

A continuous wave of new projects is expected to hit the PP industry with 9m tonnes/year being added in the 2008-2010 period. There is a concentration of new projects in the Middle East and Asia but also new capacity in Europe, America and India.

During the first quarter of 2008, 2.5m tonnes/year of new capacity started up around the world and even a larger amount of 2.7m tonnes/year is expected to start up in the fourth quarter this year.

Sagel explained that as excess capacity builds up, a fierce battle will take place for export markets.

“Any producers with uncompetitive costs of production are going to have a hard time maintaining their export positions,” he added.

For more on polypropylene visit ICIS Chemicals Intelligence

 

 

By: Peter Taffe
+44 20 8652 3214

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