EPCA '10: Responding to global challenges

02 October 2010 12:00  [Source: ICIS news]

By Nigel Davis

BudapestLONDON (ICIS)--Petrochemical producers are cautiously optimistic as they gather in Hungary’s strikingly beautiful capital Budapest for the 44th European Petrochemical Association (EPCA) meeting.

Running from 2-6 October, this year's meeting has attracted more than 2,240 registered delegates, nearly 18% more than in 2009. Following two years of disquiet  first, about the global financial meltdown and the impending recession; and second, about looming olefins and polyolefins overcapacities most will feel better placed.

Europe’s petrochemicals producers are performing surprisingly well. Markets have held up through the third quarter. After a particularly strong first half of 2010, it is almost as if the year is done – or the money is in the bank, anyway.

There is no time to be complacent, however. Ireland's debt crisis looms large. Chemicals demand downstream has improved markedly but shown some weakness since June. European and indeed global producers have for too long perhaps been braced for the impact of the significant new capacity additions in the Middle East.

The consensus view is that despite current setbacks to do with feedstock availability and the speed with which new facilities can realistically be brought on stream, Middle East capacities will ultimately have more of an impact on European markets.

Some European polyolefins capacities have been cut. Shell confirmed on 29 September that it would cut 240,000 tonnes of ethylene capacity in Germany. The move signalled the seriousness of a situation in which further changes to Europe’s olefins supply can be expected.

“The survival instinct through the downturn enables us to hold on to gains, bringing a better return on our fixed-cost base and better margins,” EPCA president Tom Crotty noted in an EPCA preview published by ICIS Chemical Business (ICB). The outlook for the second half is positive, and Crotty said he expects the sector as a whole to put in a strong overall 2010 performance.

It looks now as though 2010 has been a recovery year and that 2011 could be relatively good. Indeed, Crotty sees no fundamental reason why it should not be so. “For 2012 and 2013, the drivers will be simply the supply/demand balance and margins will still be pretty solid,” he said.

After a period of shock, Europe’s petrochemical producers have adjusted remarkably well to a much-changed operating environment. But there can be little doubt that their continued ability to do so will be tested to the full in the coming years.

The EPCA has a thought-provoking theme for the 2010 meeting: “Nine billion people in 2050. The chemical industry as enabler of solutions.”

To discuss issues facing the chemical industry go to ICIS connect


By: Nigel Davis
+44 20 8652 3214



AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

ICIS news FREE TRIAL
Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index

Related Articles