06 February 2009 22:26 [Source: ICIS news]
By Prema Viswanathan and Malini Hariharan
The petrochemical major believes strongly that this region provides a ray of hope amid the uncertainty that shrouds polymer markets today, the official said.
“The difference between the challenges we face currently and those we encountered during earlier downturns is that this time round supply side issues and demand side problems are coming to a head at the same time,” ExxonMobil polyolefins business unit vice president John R Verity told ICIS news on the sidelines of PlastIndia 2009.
This is a fairly unique situation, he added.
“At ExxonMobil Chemical, we had for a long time been expecting supply side issues to emerge this year when the new capacities in China and the Middle East started up. But what we didn’t expect is the slump in demand which accompanied the global economic downturn,” Verity said.
The issue becomes even more critical now, with ExxonMobil’s refinery and cracker complex in
But Verity indicated he was not overly concerned whether Chinese polyolefins demand will see a resurgence before the spectre of oversupply confronts the market.
“We make our investments with a long-term perspective, and are willing to weather any ups and downs along the way,” he said. In the longer term,
He said he thinks it is unlikely, however, that the industry will see any significant demand growth in polyolefins this year, although he was not willing to make any projections. “When real underlying demand will emerge is uncertain. What we are seeing now is restocking and it is not a reflection of underlying demand,” he said.
The restocking was a natural progression from the destocking that took place from September to November 2008, he pointed out.
“We are not likely to see any real demand until the end of this quarter,” he said.
Particularly perturbing were the January numbers for automotive sales in the
As far as
These projects exemplify a key aspect of the company’s growth strategy - that of diversifying its feedstock slate and product portfolio, said Verity.
ExxonMobil is building a new cracker in
Besides selling polyolefins and other products into
“Currently, India accounts for around 1% of ExxonMobil Chemical’s total revenue, but this is set to increase in the years to come, as the Indian market expands,” he said. Testimony to this was the fact that even high value-added products such as the company’s metallocene polyethyelene products and speciality elastomers were finding a ready market in
In a presentation at the Plastindia 2009 International Conference, Verity stressed that the long term outlook for the industry remains bright.
The fundamental demand driver will be the growing population, which the World Bank projects will rise from 6bn to 8bn by 2020. The global economy would also double during this period creating opportunities for petrochemicals and plastics, he added.
But he cautioned that the next few years would be challenging as the industry is experiencing a period of great uncertainty.
Describing the last eight months as unprecedented, Verity highlighted the crisis in the automobile sector, rise in unemployment in the
“In my 30 years, I have not seen anything like this. There has been a significant collapse in demand,” he said.
“Many new projects would be starting in the next 2-3 years when the industry is seeing reduced demand growth or demand destruction in developed countries. This will force older plants to shut down and drive restructuring in the industry,” he said.
PlastIndia 2009, the largest Indian plastics industry exhibition and conference, began on Wednesday ends on Monday, 9 February.
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