EPCA ’08: Polyolefins feeling downturn - Repsol

29 September 2008 17:49  [Source: ICIS news]

MONTE CARLO (ICIS news)--The slump in Spain’s automobile and housing industries had helped drive the polyolefins sector into a downturn earlier than expected, Repsol YPF’s head of chemicals, Benjamin Palomo, said on Monday.

The US government’s $700bn (€476bn) bailout plan for the crippled banking system was crucial for restoring confidence in the sector and in the wider economy, he suggested on the sidelines of the European Petrochemical Association (EPCA) annual meeting here.

“In polyolefins the downturn has moved forward to 2008,” Palomo added. “We have noted the slowdown since the beginning of the year.”

However, it was difficult to say whether a surplus of product in the market was due to an excess of capacity or a lack of demand.

Converters had stopped buying polymer and September volumes were lower than expected and the product pipeline emptied.

“From past experience this is a temporary phenomenon,” he said. The [rescue] package from the American government would be vitally important and could help determine when converters start buying again, he suggested.

The plastics demand slowdown was caused by a lack of confidence on the part of consumers who had seen disposable incomes hit by the knock-on effects of the credit crunch and the sharp downturn in the automobile and construction industries in the Iberian peninsula.

“Everything is compounded,” Palomo said. “I don’t like to be too negative these days. Confidence makes things move.”

Repsol YPF has considerable market share in polyethylene and polypropylene in Spain and Portugal and markets some material in France and Italy.

The company is upgrading its naphtha cracker at Sines in Portugal to 570,000 tonnes/year and integrating olefins output downstream by adding 300,000 tonnes each of linear low density polyethylene (LLDPE) and polypropylene (PP) capacity.

The cracker upgrade and polyolefins addition are due on stream in the second half of 2011.

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By: Nigel Davis
+44 20 8652 3214

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