Europe to see more cracker shutdowns in next five years − Dow CEO

24 October 2012 17:19  [Source: ICIS news]

HOUSTON (ICIS)--Europe is going to see more cracker shutdowns and plant idlings in the coming five years as producers adapt to market demand and Middle East production capacities, the CEO of Dow Chemical said on Wednesday.

“What we are going to see in the next five years in Europe, is, in my belief, more shutdowns and more idlings because you can’t keep [crackers] running at the [current] slim margins,” Andrew Liveris told analysts during Dow’s third-quarter results conference call.

Dow, for its part, may re-evaluate its crackers in Europe once its Sadara petrochemicals project in Saudi Arabia comes on line, Liveris said.

However, Dow Chemical's European crackers in Spain, the Netherlands and Germany are large-scale plants with relatively favourable cost positions, he said.

“We are in the lowest-cost of the highest-cost position in Europe, so therefore we should be the last to shut down,” he said.

Liveris also said that it would generally make not much sense to ship ethane from the US to feed European-based crackers. A Dow competitor, INEOS, recently announced plans to ship US shale-derived ethane to its European operations.

However, Liveris said that this makes sense only if a company already has ethane cracking capacities in place in Europe – as is the case for INEOS. Naphtha-based producers, on the other hand, would face a huge capital barrier as they would have to convert plants to ethane feedstock, he said.

“There has been ethane available around the world for a long time, but it hasn’t moved for a reason,” he said.

And even though Dow has liquid petroleum gas (LPG) cracking capability in the Netherlands, it makes more sense for the company to produce in the US and ship the finished product to Europe, Liveris said.

“I think [INEOS] is more a one-off, rather than systemic,” he added.

By: Stefan Baumgarten
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