14 October 2010 15:45 [Source: ICIS news]
BUDAPEST (ICIS)--World structural oversupply has meant the petrochemical sector is “not out of the woods yet” despite a strong rebound in demand, pricing and margins since the lows of early 2009, an international consultancy said on Thursday.
“The sector still faces several years of structural oversupply, and any further slowdown in the world economy will impact the petrochemical industry,” Noor Jivraj, senior representative of Jacobs Consultancy, told the World Refining Association's (WRA's) 13th Annual Central and Eastern European Refining and Petrochemicals Roundtable in Budapest, Hungary.
“Asian demand growth cannot absorb all the new capacity east of ?xml:namespace>
Central & Eastern Europe (CEE) was in a better position than Western Europe “to weather this storm" as its geographical situation meant Middle Eastern petrochemical exporters faced additional logistical costs to access its markets, Jivraj said.
With global demand at 67m tonnes, PE remained the most utilised plastics resin, Jacobs Consultancy figures showed.
Historically, PE has enjoyed a strong annual growth rate in excess of 5%, but demand slowed down from 2007 following the economic slowdown, Jivraj said, adding that; "due to overenthusiastic investments in the Middle East and
More than 4.5m tonnes of new PE capacities were installed during 2009, while as much as 27m tonnes were scheduled for implementation by 2015, Jiraj said.
Jacobs calculated the long-term PE growth rate through to 2020 at around 4%, with CEE demand likely to grow at an annual 4.8% compared to just 1.7% in the mature Western European market.
“CEE’s share in the EU’s PE demand is likely to increase from its current level of 24% to over 37% in the long term,” Jiraj said.
“The Middle East will be the dominant exporter by 2011 relying on growth in
Looking at PP, Jiraj observed that 17m tonnes of new capacities, largely in Asia and the
With annual global demand having exceeded 45m tonnes in 2009, PP was the fastest-growing commodity resin.
“Historically, PP has witnessed above average annual growth rates in the order of 8-10%, but it is now maturing and PP demand is likely to grow by about 4.5% in the long term [to 2020],” Jiraj said.
“The economic downturn has affected the capacity utilisation and the new capacity additions will further depress the situation - the global PP industry is likely to face a trough in utilisation over 2010-2015 [at around 75-80%],” he added.
Jiraj also forecast that PE demand in CEE was likely to grow at about 4.4% in the long term, compared to the 1.8% growth rate anticipated for
“Even with large PE capacity additions in
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