Commentary: European petrochemicals at a crossroads

23 September 2013 00:00  [Source: ICB]

European petrochemical players have struggled mightily in the past few years with weak demand and a cost disadvantage in using higher priced naphtha feedstock versus cheap natural gas liquids (NGLs) in the US and the Middle East.

The sector may finally be at a crossroads, as two companies have announced plans to potentially close crackers. France’s Total plans to shut down its 320,000 tonne/year, “acutely loss-making” naphtha cracker in Carling, France by the second half of 2015.

“The European petrochemicals market is facing continued overcapacity and growing international competition. In such context, it is our industrial responsibility to anticipate and adapt our production capacities to demand,” the company said in early September.

And now Switzerland-headquartered INEOS said it plans to shut down its petrochemical facility, including the cracker, in Grangemouth, UK by 2017 unless it can stem losses and invest to prepare the site to accept US ethane imports.

To source NGLs from the US and get the cracker operating at 100%, INEOS would need a £150m ($241m, €178m) investment to prepare the site and a further £200m to offset losses while a new tanker facility was being built, it told UK newspaper The Falkirk Herald.

By: Joseph Chang
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