29 July 2013 21:51 [Source: ICIS news]
HOUSTON (ICIS)--The more than 10m tonnes of ethylene capacity set to come online in the ?xml:namespace>
The only chance commodity chemical manufacturing has in Europe is if it goes full bore into creating its own shale gas revolution as has occurred in the US, said Paul Harnick, KPMG’s global chief operating officer for the company’s chemicals and performance technologies practice.
However, for many companies producing in
KPMG recently published a report on strategic realignment in the global chemical industry. One of its focuses was on how the large increase of
As a mature economy, the
KPMG sees three potential scenarios resulting from the
The first is a return to boom-and-bust cyclicality in the
The second is price and margin erosion in Asia due to increased competition from
The third is a doomsday scenario for European commodity chemical producers: If US producers export directly to Europe, or Middle East producers respond to increasing competition in Asia by switching their export focus to
“Inevitably that will lead to closings and restructuring,” Harnick said.
While the outlook for commodity chemical production in
The analyst sees the companies in the region having strong intellectual property bases that can be useful as part of joint ventures in other parts of the world.
As a mature economy with a growth feedstock disadvantage, European chemical companies still can leverage their wealth of technological know-how to access the growth in emerging markets, he said.
It is a point shared by his colleague, Mike Shannon, KPMG’s global leader of chemicals and performance technologies practice.
“It’s not that Europe can’t be profitable,”
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