30 March 2009 01:19 [Source: ICIS news]
SAN ANTONIO, Texas (ICIS news)--The global economy will revive sooner than many think and will be led by a speedy recovery in chemicals and broader manufacturing, a leading chemical executive said on Sunday.
Jeff Lipton, chief executive of NOVA Chemicals, told an International Petrochemicals Conference (IPC) audience that “the chemicals industry will recover faster than analysts believe because manufacturing will lead the recovery”.
“The entire supply chain is shrunken and inventories are very low,” he said, arguing that the current ?xml:namespace>
“By the end of February 2009, we had by far the lowest inventory levels our industry has ever seen relative to consumption, so when confidence returns there will be a surge in buying for polyethylene and other chemicals,” he said.
“Therefore, we will see recovery a lot sooner than analysts suggest,” he added.
Lipton, who will retire as NOVA’s chief executive on 1 May, also predicted that the US and Canada will again emerge as the global centre of chemicals and that the North American industry soon will see a new golden age.
Speaking to some 350 industry executives, Lipton said that new technology and new product development among North American chemical producers combined with growing supplies of low-cost natural gas liquids (NGLs) in the region “will shift the global chemicals industry back to
“Total NGL from new discoveries in
“Those NGL reserves are more than 250% higher than the previous levels,” he said, suggesting that abundant supplies of natural gas liquids will again enable cost-competitive North American chemicals production.
However, Lipton also forecast that the structure of the chemicals industry will change significantly as the sector becomes increasingly concentrated among large companies that have financial strength.
“Everything will have to be world scale with integrated production increasingly common,” he said. “No one is going to build a major ethylene cracker without also putting in the consuming facilities for that ethylene.”
“Company scale and financial strength will be necessary over the next decade or two, with much larger companies than we’ve seen in the last few years,” Lipton said.
Abu Dhabi-based International Petroleum Investment Company (IPIC) agreed in February to acquire NOVA for about $2.3bn (€1.7bn).
Lipton spoke on the opening session of the three-day IPC, sponsored by the National Petrochemical & Refiners Association (NPRA).
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