05 July 2013 16:37 [Source: ICIS news]
LONDON (ICIS)--The US shale gas revolution is putting Europe’s polymer industry under enormous pressure, the CEO of Germany-based Bayer MaterialScience (BMS) said on Friday.
Access to cheap feedstocks is allowing the US chemical industry to export polymers with around half the production cost of naphtha-reliant facilities in Europe, according to Patrick Thomas.
In a video interview with ICIS, Thomas said: “Clearly in America shale gas has lowered energy prices enormously.
"Shale gas is effectively being exported as polyethylene [PE] from America to Europe at about half the cost of manufacturing in Europe so it’s a very significant impact on the polymer industry.”
Bayer MaterialScience has also been impacted significantly because it relies on aromatics which have become structurally short on the back of the switch to ethane in the US.
Thomas said: “For our part of the industry that relies on aromatics there is a minimal effect in terms of benefit but there is a slightly negative effect because most American crackers are operating on gas feed rather than naphtha so there is less availability of aromatics.”
He added: “And with a couple of plants shutting down for turnarounds in Europe we’ve seen the benzene market tighten and fly up in price to typically $600/tonne (€463/tonne) above naphtha whereas a normal level would be around $400[/tonne].
"That’s been quite a supply shock in terms of raw materials. In our first-quarter results there was an impact of just over €100m just on the benzene fly up.”
($1 = €0.77)
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