03 October 2009 13:00 [Source: ICIS news]
By Nigel Davis
LONDON (ICIS news)--“I think we’re now through the worst of the credit crunch downturn but we must not forget that this was an overlay on our normal cycle and we’re still going through that,” says INEOS Olefins & Polymers CEO Tom Crotty in this year’s ICIS EPCA meeting supplement.
“Anyone who says that the industry is going to be in great shape in the middle of next year is fooling themselves.
“We’re still waiting for the major impact of excess capacity from the ?xml:namespace>
He doesn’t foresee a “significant pick up” until 2011.
A year ago, the petrochemical industry was in such a different place. And, although prepared for tougher times, few anticipated the extent or depth of the approaching downturn.
The sector was caught off guard, as Shell Chemicals vice president Graham van’t Hoff admits.
Cracker rates in the
Currently, it looks as though de-stocking is at an end; inventories are being re-built.
“We certainly think things are better,” says van’t Hoff.
But he adds that it could take between two and five years to return to earlier demand levels.
For EPCA 2009, the focus is very much on sustainability: the sustainability of demand (can it drop again?) and, indeed, of plants, production locations and entire businesses.
Margins should have improved month on month this year with rising product prices, but companies still have had to contend with an almost 70% increase in the price of oil.
Now, oil price weakness is feared for the consequences it might bring in terms of the ability to sustain prices.
Another dip in demand also is clearly possible. Government stimulus packages have helped buoy business globally.
Under such circumstances, only the most efficient plants and production locations might be expected to prosper. Some may not survive.
EPCA president Albert Heuser, who is also president of petrochemicals at BASF, reckons there are more closures to come. Small, outdated and non-integrated plants are in danger, he says.
He expects overcapacity in the market for 2010 and 2011 at least.
Longer term, sustainability in petrochemicals in
Companies attending EPCA ’09 continue to battle through the aftermath of the downturn induced by the credit crunch. Given the new cracker-plus-one capacities due on stream in the Middle East and capacity growth in
European producers’ operability has been and continues to be tested to the full. Both clever tactics in the coming months and a clear long-term strategy will be needed to see them through.
The European Petrochemical Association (EPCA) meeting in
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