Europe aromatics players face lower growth amid ‘dangerous times’

25 November 2009 15:18  [Source: ICIS news]

AMSTERDAM (ICIS news)--Players in the European aromatics sector are facing a period of lower growth in the aftermath of the petrochemical industry’s downturn in 2009, said Paul Hodges, Chairman of International e-Chem, on Wednesday.

“These are dangerous times,” said Hodges, speaking at the 8th European Aromatics & Derivatives Conference in Amsterdam, the Netherlands. “The banking system is on life support. None of us have ever been here before, and we have no clear idea what will happen.”

Hodges nevertheless said that there was much to be learnt from previous downturns and how the industry had reacted then.

“Think tomorrow, but act today,” he said. “This is a marathon. A purely short-term approach will see companies in a vicious circle as this will close down their options for the future.”

Hodges outlined five key points for companies to act on in 2010:

• Industry restructuring is likely to start: Participants should aim to take advantage of market conditions in order to capture the highest overall value for their company, said Hodges. This required careful analysis of feedstock positions, utility costs and other key cost and profit elements, he added.
• Global reach will be important: Volatile markets could offer more opportunities for arbitrage to those players able to optimise operations, and Hodges. “The objective is to make money, not to cut costs,” he added.
• Good logistics are key to implementation: Companies should be ready to enter into partnerships to take full advantage of opportunities in a timely manner. This could involve companies considering opportunities for virtual or ersatz integration in order to reduce costs.
• Reliable, low-cost technology is essential: Companies should avoid cutting back on maintenance and investment for a short-term profit boost, Hodges said.
• Size is important in defining unit cost: This was an opportunity to change the terms of trade, said Hodges. Companies would need to maintain this as a key parameter when reviewing their plant or site portfolio, he added.

The 8th European Aromatics & Derivatives Conference, jointly organised by ICIS and International e-Chem, commercial advisers to the global chemical industry, takes place from Wednesday 25 November to Thursday 26 November 2009.

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By: Truong Mellor
+44 208 652 3214

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