02 October 2011 15:56 [Source: ICIS news]
BERLIN (ICIS)--The slowdown in demand and fall in petrochemical margins over the past couple of months are a “fairly natural adjustment” to mid-cycle conditions, Tom Crotty, INEOS board director and European Petrochemical Association (EPCA) president said on Sunday.
“Things are pretty good really," Crotty said on the sidelines of the 45th annual EPCA meeting.
“Basic demand is pretty steady,” driven by major western economies that have recovered following the 2008–2009 crisis and are “just ticking over”, said Crotty.
The rate of capacity additions has slowed and petrochemical supply/demand balances are unlikely to change over the next couple of years. “The trend line is pretty solid, so margins should keep moving in the right direction,” he added.
The strong first quarter of 2011 has given way to a period with margins more reflective of mid-cycle conditions, Crotty said.
At the end of 2010 and in the first few months of 2011 “everything was drum tight”, he added, driving margins higher than might have been expected.
“It’s completely different to ’08 and ’09, when the banks cut back lending so industry shut down,” he said, referring to the deep concerns expressed currently over the sovereign debt crisis in the eurozone.
“Demand hasn’t gone back to the boiling point of 2007, which was driven by crazy lending.”
Current petrochemicals demand is more solidly based, he said, adding: “I think 2012 will be a pretty good year”.
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