Europe chems could be marginalised by Middle East - KPMG

15 December 2008 11:27  [Source: ICIS news]

By Mark Watts

Mideast competition could marginalise Europe chemsLONDON (ICIS news)--The European chemicals industry is in danger of being marginalised due to competition from feedstock-advantaged Middle East producers and falling levels of innovation, financial services firm KPMG said on Monday.

KPMG said the Middle East chemicals industry grew at 9% a year between 1997 and 2007 and would grow at 9.5% a year until 2020 – more than twice the global average.

“The Middle East-based companies have made the most of their natural resource and transformed their business from a supply of raw material to heavyweight, global petrochemicals production,” said European head of chemicals at KPMG Chris Stirling.

“Our research shows that 53 plants could come onstream by 2012 which, if taken together with investment in Asia, could lead to European players being marginalised on the global market,” he added.

KPMG said European producers could bolster their position in the short-term by offshoring, but the longer term challenge to the market was to make the most of an historic upper hand in innovation and team up with Middle Eastern companies to access their resource advantages.

Innovation in the European sector had been falling due to high levels of regulation and difficulties in attracting a sufficient skills base to the industry, KPMG said.

Stirling added that the credit crisis could act a catalyst for further consolidation in the European industry, as well-capitalised trade buyers take advantage of weakened competition from private investors.   

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By: Mark Watts
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