01 October 2013 22:05 [Source: ICIS news]
BRUSSELS (ICIS)--Annual demand for polyvinyl chloride (PVC) resins within the EU has dropped by around 1.4m tonnes from its pre-crisis peak, a manager at Belgian chemicals producer Solvay said on Tuesday.
Demand has fallen from 6.2m tonnes/year in 2007/8 to around 4.8m tonnes in recent years, as a result of prolonged economic malaise in the region, global competition and shutdowns, according to Daniel Ortiz Martinz, technical marketing manager for PVC specialties at Solvay PVC subsidiary SolVin.
According to Martinz, industry consolidation is “inevitable”, despite a gradual increase in demand over the last four years.
“We are facing some important structural challenges, although demand is slowly recovering since 2009. In Europe, the industry consolidation is inevitable, some consolidation already taking place,” he said, speaking at an event organised by the European Council for Plasticisers and Intermediates (ECPI).
Solvay is currently pursuing a joint venture with INEOS to combine their PVC businesses, with a letter of intention submitted by the companies to regulators in mid-to-late September, according to Martinz. Solvay CEO Jean-Pierre Clamadieu told ICIS in July that the companies are working to close the deal before the end of the year.
The PVC industry’s core business remains the building and construction sectors, meaning that eastern Europe is currently a faster-growing market than western Europe, Martinz said. Eastern Europe’s construction sector is driven by new buildings, while western Europe is reliant on renovations of existing buildings.
“In the west, we basically have the renovation market, That’s a reflex to the crisis that we’ve been facing ever since 2008,” Martinz said, adding that market players who have the ability to do so are currently focusing on higher-margin specialty PVC applications.
Western Europe’s annual PVC resins capacity is 6.4m tonnes, while eastern Europe’s is 2.3m, Martinz added.
The industry is also awaiting the outcome of the potential sale of the upstream operations of former Arkema PVC subsidiary KEM ONE. Bidders, including two private investment firms and a French trade union, were granted two months to finalise bids as of 16 September.
SolVin is 75%-owned by Solvay and 25%-owned by German chemicals major BASF.
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