Europe's cracker operators are heading into a crisis, again, for the 2nd time in 3 years.
The chart above, based on official APPE data, compares quarterly ethylene volumes since 2000. It shows:
• 2011's total Q1-Q3 volume of 15.2MT was one of the lowest in the period
• Only 2000-1 and 2009 saw lower volumes
And it appears that markets are getting worse, not better. ICIS's Nel Weddle reports that:
"European crackers are operating on average at around 70-75% of nameplate capacity, although some crackers are operating below 70% and some higher than 75%, depending on location and derivative portfolio."
Operating rates were only averaging 82% before these further cutbacks hit. So it is entirely possible that total 2011 volume could end up being the 2nd lowest in the period, and only higher than in 2008.
Equally, the outlook for 2012 is hardly positive. Governments have shot their supposed 'silver bullet' of stimulus programmes. All they achieved was a massive increase in the debt burden. And oil prices remain at levels where major demand destruction is underway, some 2% of global GDP.
The need for companies to look seriously at the potential for new cluster strategies to counter the crisis is becoming increasingly urgent. This could help to justify investments in energy efficiency and feed flexibility, to reduce break-even points at lower operating rates for older units.