Cracker rates could fall to 78% in 2011 - McKinsey

10 February 2010 22:11  [Source: ICIS news]

VIENNA (ICIS news)--Cracker utilisation rates could fall to approximately 78% next year unless there are additional closures, a leading consultant said on Wednesday.

“It’s a bleak outlook unless we get some closures,” said Alexander Vogel, a principal with McKinsey consultancy.

Speaking at the Global Petrochemicals 7th Annual Meeting, Vogel told delegates that “We need someone to start taking capacity out of the market”.

Ethylene capacity in Europe and non-China Asia is most at risk of closure, he said.

Capacity utilisation rates could fall to 75% in Europe and 63% in non-China Asia in 2011, according to Vogel.

At the other end of the scale, 2011 utilisation rates in China and the Middle East/Africa region would be approximately 95% and 91% respectively.

Vogel cited structural overcapacity as the major concern for the petrochemicals industry during the global economic crisis.

“Combined with the new capacities coming on-stream in the Middle East, this could have a detrimental affect on the industry,” he said.

Fred du Plessis, president of consultancy FdP Associates, said that plant closures resulting from the crisis will lead to the replacement of old production capacities.

This presents an opportunity to build new, more profitable world scale capacity, he said during a roundtable discussion.

The conference, organised by the World Refining Association (WRA), ends on Thursday.

 ($1 = €0.71)

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Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Anna Jagger
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