Europe olefins production down sharply in Q4 2008 - APPE

11 February 2009 12:02  [Source: ICIS news]

By Nel Weddle

LONDON (ICIS news)--European ethylene (C2), propylene (C3) and butadiene (BD) production was cut back heavily in the fourth quarter of 2008, according to official figures released late on Tuesday.

Ethylene experienced the most dramatic reduction with output down 28% compared to the same period in 2007, according to initial data from the Association of Petrochemicals Producers in Europe (APPE).

Around 5.6m tonnes of ethylene was produced during January, February and March, but this had sunk to just under 4m tonnes in the fourth quarter, which was 27% down on the third quarter.

The extent of the fall in butadiene production came close, with fourth quarter production down by 25% at 419,000 tonnes year on year.

Output was down a more hefty 27% from the first quarter of 2008 when producers were doing all they could to maximise production because of the strength of global demand.

Propylene output was at just over 3m tonnes in the fourth quarter, a 24% cut from the same period in 2007 and also from the third quarter of 2008.  Production was almost 1m tonnes less in the fourth quarter compared to the beginning of the year.

The decline in output came as no surprise to industry sources who had never before witnessed such a dramatic and rapid decline in demand as seen in the fourth quarter of last year.

The unprecedented drop in derivative production due to the global economic crisis left olefins producers struggling to maintain cracker operating rates.

The majority of European crackers were cut back to technical minimums, while others had maintenance and technical shutdowns extended.

In fact, for some sources the only surprise was that the decline was not greater.

“Is that all?” said one industry observer.

“We have more” said a  major producer, adding that its year-on-year ethylene cut for the fourth quarter of 2008 was closer to 34%.

Cracker rates were increased in January and February this year, largely as demand for the key derivatives polyethylene (PE) and to a lesser extent polypropylene (PP) picked up from its lowest point in December.

Derivative demand for butadiene was still weak and seen to be capping cracker operating rates in some areas, even in spite of some relief seen through exports.

The APPE figures are subject to revision.

For more on the olefins visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Nel Weddle
+44 20 8652 3214

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