EPCA ’08: INEOS' Crotty plans ahead - video

28 September 2008 17:07  [Source: ICIS news]

By Nigel Davis

INEOSMONTE CARLO (ICIS news)--Lengthening supply demand balances, the high oil price and the credit crunch will combine to push the petrochemical industry into a downturn in 2010, Tom Crotty, CEO of INEOS Olefins in Europe, said on Sunday.

“There is no doubt the industry has a tough couple of years ahead in 2009 and 2010,” he said on the sidelines of the European Petrochemicals Association (EPCA) meeting.

"Our view is that we will slide down in 2009 and that the trough will be in 2010.”

The impact of new olefins production capacity in the Middle East will become an issue in 2009/2010, and the impact of the credit crunch on end-use production will also be felt over the next couple of years, he added.

The rising oil price has caused a “quantum shift in feedstock costs”, he said.

“Overall, the [petrochemical] industry has had a tough couple of months,” Crotty said, citing the squeeze on margins as another key issue.

The third-quarter ethylene settlement, €108/tonne ($158/tonne) down from the third quarter to €1,120/tonne, had helped put some good margins back into the business, he said.

INEOS expects to have to navigate through a difficult period and has worked to have businesses robust enough to be cash-positive at the bottom of the cycle.

“Our entire thrust since we acquired Innovene has been to get the business in shape,” Crotty said. “We’ve done the work, now we expect delivery.”

Investment in the European cracker business has seen the installation of a new furnace in the Cologne plant, which was currently in the start-up phase.

Greater feedstock flexibility was being introduced at the cracker in Grangemouth, Scotland with the projects due for completion in 2010.

“In Europe, you need scale and flexibility”, Crotty said.

“We’ve spent two and a half years getting our business into shape preparing for this period.”

Crotty said he did not believe that INEOS was overly exposed by the credit crisis.

“We are at the lowest range for leveraged chemicals companies,” he said.

“We have the benefit that we put our deals in place two years ago. We have good long-term credit arrangements in place that run through the next 10 years.”

To discuss issues facing the chemical industry go to ICIS connect

The impact of new olefins production capacity in the Middle East will become an issue in 2009/2010, and the impact of the credit crunch on end-use production will also be felt over the next couple of years, he added.

The rising oil price has caused a “quantum shift in feedstock costs”, he said.

“Overall, the [petrochemical] industry has had a tough couple of months,” Crotty said, citing the squeeze on margins as another key issue.

The third-quarter ethylene settlement, €108/tonne ($158/tonne) down from the third quarter to €1,120/tonne, had helped put some good margins back into the business, he said.

INEOS expects to have to navigate through a difficult period and has worked to have businesses robust enough to be cash-positive at the bottom of the cycle.

“Our entire thrust since we acquired Innovene has been to get the business in shape,” Crotty said. “We’ve done the work, now we expect delivery.”

Investment in the European cracker business has seen the installation of a new furnace in the Cologne plant, which was currently in the start-up phase.

Greater feedstock flexibility was being introduced at the cracker in Grangemouth, Scotland with the projects due for completion in 2010.

“In Europe, you need scale and flexibility”, Crotty said.

“We’ve spent two and a half years getting our business into shape preparing for this period.”

Crotty said he did not believe that INEOS was overly exposed by the credit crisis.

“We are at the lowest range for leveraged chemicals companies,” he said.

“We have the benefit that we put our deals in place two years ago. We have good long-term credit arrangements in place that run through the next 10 years.”

To discuss issues facing the chemical industry go to ICIS connect


By: Nigel Davis
+44 20 8652 3214



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