21 April 2010 08:58 [Source: ICIS news]
By Chow Bee Lin
SHANGHAI (ICIS news)--The global polypropylene (PP) industry will avoid a major consolidation in the near future although it is grappling with the rapid capacity additions in recent years amid the global economic downturn, said a senior executive of LyondellBasell on Wednesday.
Next year would still be difficult for PP producers, but a repeat of the industry rationalization of the same magnitude set in 2002-2003 was unlikely, said Anton de Vries, senior vice president for Europe, ?xml:namespace>
De Vries was speaking at the sidelines of the Chinaplas exhibition – Asia’s largest annual plastics event, which runs up to Thursday in
“I personally don’t expect to see major consolidation in the PP sector. I may be wrong, but I think it’s going to be limited, more limited than what we saw in the downturn (in early 2000s),” said de Vries.
The PP sector had gone through a major rationalisation process in the previous downturn in the early 2000s, and further consolidation would be "more difficult,” he said.
The attempt of Indian conglomerate Reliance to acquire LyondellBasell was more a case of a regional company aspiring to go global, rather than a consolidation forced by tough times, he said.
“If you look at it in the strategic sense, you can see that Asian producers want to be also global producers, like many of the European and American chemical companies are. I can see that the strategic logic very clearly there,” he said.
LyondellBasell is the global polymer leader but a collapse in demand due to the twin financial and economic crises in late 2008 forced its
Reliance took an interest just as LyondellBasell was crafting a way out of bankruptcy with its creditors.
“Sometime over the next five to 10 years you will see large Asian companies -Chinese, Indian or Thai companies - trying to acquire a global player like LyondellBasell,” said de Vries.
Some Chinese PP suppliers were likely try to extend their reach overseas, but any export from
The cost position of Chinese PP manufacturers “is not good enough” for the global distribution of their products, de Vries said.
He said the Middle East would still be the major dominant global exporter of polyethylene (PE) and PP in the coming years although the producers face trade barriers in the form of high import tariffs in many markets, including
“I don’t think
Middle Eastern PP producers may have the cost-advantage, but Asian players were better situated given the strong growth opportunities in the region, he said.
“The feedstock advantage will not last forever as there were limits to the quantity that comes out of the
“I don’t think it’s such an issue for Asia, quite frankly, that it doesn’t have the same feedstock position as the
With additional reporting by Nurluqman Suratman and Pearl Bantillo
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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