APIC ’13: No recovery for European petchems production – analyst

09 May 2013 13:14  [Source: ICIS news]

TAIPEI (ICIS)--The depressed European petrochemicals market is unlikely to recover significantly, as international competition, ageing and unprofitable facilities and a flatlining regional economy continue to weigh on the industry, an analyst said on Thursday.

Current low levels of production growth are not anticipated to speed up before 2020, if at all, according to David Witte of IHS.

“We don’t really foresee a recovery in the European overall production of petrochemicals. We believe that this market will continue to be pressured by imports, not only from the Middle East but also from the US Gulf Coast, and relatively high-cost position and low economic growth is going to combine to flat, declining overall production in the western European market.

“We do expect some rationalisation of facilities to take place over that time period,” he added.

European petrochemicals companies have been setting their sights on developing markets, as economic malaise in the EU continues to hang over the region. Increasing regulatory costs, high feedstock prices relative to international competitors, and inefficient crackers have made commodity chemicals production increasingly unprofitable in the region.

“Comparing western Europe to North America... you can see relatively similar changes in terms of the overall scope and development of petrochemical production, but when we get out, it’s a tale of two worlds, where the feedstocks really are driving investment into the US Gulf Coast, and western Europe, [with] relatively older facilities, seeing a moderate decline in overall production,” he added.

The US, by contrast, is on track to become the world’s largest producer of natural gas, to the extent that marginal exports of liquefied natural gas (LNG) would be unlikely to have a perceptible impact on the domestic gas price, Witte added.

He said: “We predict a rapid rise, as we get into the 2015-2020 period, in terms of new capacity builds [on the US Gulf Coast] which will be primarily targeted to the export markets.”

By: Tom Brown
+44 208 652 3214

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