30 March 2010 00:08 [Source: ICIS news]
SAN ANTONIO, Texas (ICIS news)--Economically the world is in a better place. And petrochemical producers are in a better mood. But few are whooping it up.
If you are a customer, you worry about security of supply. If you are a producer, you’re managing supply, demand and price - for the time being. And you’re worried about what comes next.
This will be a peak year for the addition of new olefins and polyolefins capacity. There will be something like a 15% ethylene capacity increase between 2009 and 2011, ExxonMobil Chemical said on Monday. “It [the global capacity increase] will continue to create a competitive environment,” senior vice president Lynne Lachenmyer said.
Some expect to see the bottom of the cycle. So if you thought last year was bad, then will 2010 be worse? There is a surprising degree of optimism across the sector - although you would hardly call it unbridled. It is low key.
Big petrochemical players run their businesses for the long term and expect to have to manage through difficult, largely capacity-driven but also economically-led cycles. Most are looking towards 2011 and beyond when they expect better fundamentals, even an upturn.
The mood at this year’s NPRA International Petrochemical Conference (IPC) was described by many as one of “cautious optimism”. NPRA attendance is up. But that is not surprising given that numbers fell between 25% and 30% last year.
And supply has been trimmed to better match demand. Shell talked at the NPRA IPC of its 22% cut in
The company has taken out older, unproductive furnaces and made a great switch to gas. That places it in a stronger position given the gas outlook in the
It is clear that companies will continue this year to make their global operations fit for purpose. That may mean that further closures are on the cards, although it is difficult to see the big cuts (in the longer-established producing regions) that some Middle East and
Capacities will be adjusted to suit demand. Markets appear to be growing relatively well, although most executives understand that there are likely to be hiccups along the way.
Producers expect cyclical downturns, but they don’t expect them to last. That is a sensible view. Companies are not sanguine, they have to be realistic in a still-difficult operating environment, yet they can afford to be a tad more optimistic.
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