09 December 2009 12:30 [Source: ICIS news]
By Prema Viswanathan
DUBAI (ICIS news)--LyondellBasell, the world’s largest polypropylene (PP) producer, expects the supply-demand balance to become worse next year as more polyolefins production capacity comes on stream in the Middle East, the company president said on Wednesday.
“Against this background, it is likely that we will see additional production line shutdowns in the industry,” said Anton de Vries, LyondellBasell's president for ?xml:namespace>
"We have already shut down 300,000 tonnes/year of polyethylene (PE) in Europe this year, but only 110,000 tonnes/year of PP [at Wesseling], so there is scope for more consolidation in PP,” de Vries said on the sidelines of the 4th Gulf Petrochemicals and Chemicals Association (GPCA) forum.
However, de Vries said it was unlikely that further consolidation in PE would be necessary in
The company had no immediate plan to further cut polyolefins capacity in the
“We had already 400-500,000 tonnes/year of PP offline in the
In fact, thanks to the strong export performance by the
The LyondellBasell president said he expected PE and PP operating rates worldwide to be well below 100% in the coming year as the demand-supply balance is still not optimal.
“Demand growth is expected to flat in Europe and the
Of course, forecasts were not foolproof, he admitted. “Margins for PE and PP makers this year were far better than anticipated, but we have to gear up for the possibility that next year may not be so good.”
However, by 2011, he expected the demand-supply balance to improve as the effects of the global economic crisis begin to wear off.
De Vries said a further factor driving consolidation in Europe and the
“It is the access to relatively low-cost gas feedstock has prompted the company to invest in joint ventures in the
The start-up of two joint ventures - the Saudi Ethylene Polyethylene (SEPC) PE units and the Al Waha Petrochemical PP plant at Al Jubail in Saudi Arabia - this year has strengthened the global competitiveness of LyondellBasell, said de Vries.
“One of the key components of the company’s strategy is to grow its presence in regions where it has access to low cost feedstocks or where it has access to the market,” he added.
The company has still not invested in polymer capacities in
“We have two compounding facilities in
“We are the largest polyolefins exporter to
Key to any new investment decision was the emergence of LyondellBasell from the Chapter 11 bankruptcy situation through the sale of the company. Since the recent announcement that
De Vries did not want to comment on the proposed sale except to emphasise that it was part of the re-organisation plan which would strengthen the financial muscle of the company.
Besides diversification of geographies, LyondellBasell’s strategy for growth also included maintaining a mixed product portfolio. “We need a mix of speciality and commodity products to reach out to different segments of the market,” said de Vries.
While the company has been strongly committed to product diversification, there has been no plans to invest in biodegradable polymers, said de Vries. “I think petrochemical-based polymers offer more value than bio-degradable polymers in terms of energy content, which can be recycled after use. This value is not present in biodegradable polymers.”
The three-day forum ends on Thursday.
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