24 November 2009 11:00 [Source: ICIS news]
By Truong Mellor and Madelon Ten Cate
LONDON (ICIS news)--After a year of crumbling margins, production cutbacks and closing plants in the aromatics industry, key players will be talking about the path forward and anticipated strategies for survival at the 8th European Aromatics & Derivatives Conference, a speaker from the event said on Tuesday.
“Aside from improved efficiency and specialisation, what the industry might see in 2010 is ersatz integration – not on the ground but through companies working together,” said Paul Hodges, chairman of International Echem. “Players will have to look at their operations and say ‘what am I missing?’”.
Hodges is one of several speakers scheduled for the conference, which is jointly organised by ICIS and International e-Chem and takes place from Wednesday 25 November to Thursday 26 November.
Sources within the industry agree that the New Year will bring a myriad of challenges, a key one being the increased capacity coming out of the Middle East and ?xml:namespace>
Within the upstream benzene market, profitability depends largely on cracker economics and olefins or polyester demand. Throughout 2009, many crackers shut down permanently or for prolonged periods of time due to oversupply and poor economics. It remains to be seen what operating rates will be profitable in 2010.
Moreover, multiple downstream plants, especially in the polystyrene markets, which saw severe competition mainly from the polypropylene business, suffered such significant losses that permanent closure was the only solution. This, in effect, put a strain on the whole styrenics chain, with styrene producers suffering declining margins for most of the year and uncertainty for the year ahead.
The seasonal downturn that is traditionally seen towards the end of the year meant that demand would remain weak until 2010, sources largely agreed.
Meanwhile, the paraxylene (PX) market in Europe has seen a slight upturn in activity this month following stronger downstream demand in Asia from the key purified terephthalic acid (PTA) sector, as players have sought to capitalise on cheap freight rates between the ARA region and
However, this uptick in buyer interest was far from a clear sign that the European PX sector would see a revival of fortunes in the New Year, a handful of sources said on Monday. This apprehension largely stemmed from the emergence of new PX capacities in both Asia and the
“The other challenge is that in 2010, the industry will see a lot of volume coming from the Middle East that will be headed for Asia,” said the trader, citing the recent start up of the new Kuwait Aromatics unit in at
Some of the solutions proposed to all these challenges will be to stay competitive via industry restructuring and careful analysis of feedstock positions and utility costs.
($1 = €0.67)
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