ICIS Top 100 chemical companies: Europe

Will Beacham

12-Sep-2014

The Top 10 European leaders table is only slightly reshuffled from the previous year. Unsurprisingly BASF retains its top position with more than double the sales of its nearest rival, LyondellBasell, which swapped places with Shell to reach second place. Bayer swapped with INEOS to reach fourth place.

The year 2013 was a tough one for the global economy, which grew at only 2.3% compared with 2.5% the previous year while Europe continued to be plagued by GDP contraction in many countries. The EU region only achieved 0.1% growth during the year, though this was a slight improvement on the previous year’s contraction of 0.3%. This impacted chemical companies headquartered in Europe, many of which suffered declines in sales revenues. However the slight improvement in demand in Europe did allow all the companies in the top 10 to report improved operating earnings and net profits compared to 2012’s depressed levels.

EuropeDuring 2014 several of the top players have become very focussed on major strategic moves to either exit or beef up and improve the competitive position in some of their commodities.

In June INEOS announced it is to acquire an additional 50% stake in styrenics producer Styrolution from joint venture partner BASF for €1.1bn. The deal – which is expected to close in the fourth quarter of 2014 – will give INEOS full control of this global styrenics leader. For BASF this is another step away from commodities as it tries to focus on value-added advanced materials.

INEOS also signed a deal with Belgium’s Solvay to put their European chlor vinyls activities into a JV – to be known as INOVYN. The deal was given clearance by the European Commission in May 2014 though the remedy package has yet to be divested. INEOS has to sell assets in Tessenderlo (Belgium), Mazingarbe (France), Beek (The Netherlands), Wilhelmshaven (Germany) and Runcorn (UK).

These moves are signs of the European chemical sector’s increasing preoccupation with the threat to its competitive position posed by the US shale gas revolution. This has cut energy and feedstock prices hugely in the US whilst Europeans struggle with high energy costs and taxation as well as a reliance on naphtha-based feedstocks.

Just in the last few weeks other companies have joined INEOS in seeking to import US ethane as a way of grabbing some of the US advantage. INEOS – as ever the trailblazer – was first to announce the construction of ethane import terminals at Rafnes in Norway and Grangemouth in Scotland. These facilities are now approved and under construction. Next Borealis – the other company with European gas crackers – announced a similar construction project plus a cracker upgrade scheme for its Stenungsund, Norway, facility.

In August SABIC revealed plans to modify its cracker in Teesside in the UK so it can use ethane. The company plans to complete the project in 2016. India’s Reliance also announced a scheme to import 1.5m tonnes/year of US ethane for ethylene cracking in India.

Europe

Dutch-headquartered LyondellBasell is grabbing the US shale advantage too. In August it announced plans to develop a world-scale propylene oxide (PO) and tertiary butyl alcohol (TBA) plant on the US Gulf coast. Slated to be operation by 2019, the unit will have an estimated capacity of over 400,000 tonnes/year of PO and over 900,000 tonnes/year of TBA and its derivatives.

This is on top of three US ethylene expansions it has announced which will add over 800,000 tonnes/year of production capacity.

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