BLOG: How Europe can avoid ‘sleepwalking’ towards offshoring of petrochemicals

John Richardson

28-Feb-2024

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: The European petrochemicals industry, to borrow Jim Ratcliffe’s phrase, does not have to continue “sleepwalking towards offshoring its industry, jobs, investments, and emissions”.

Ratcliffe, the INEOS chairman, was on the money with the phrase, contained in a call-to-action letter to European Commission President, Ursula von der Leyen, earlier this month. This came in the same week that producers launched the Antwerp Declaration for a European Industrial Deal.

This is all great news for the European industry as my two scenarios for global petrochemicals in 2030 – Supermajors or Deglobalisation – will be shaped by the actions of companies and legislators.

In Europe, the threat of a further flood of competitively priced and lower-carbon imports of polymers risks lost local jobs in refining, petrochemicals and downstream (the downstream jobs being many more than upstream).

And if petrochemicals plants shut plant, upstream refineries important for local fuels supply may be threatened.  You can also make a case for recycling targets being hard to achieve under Supermajors.

As well as lobbying legislators, what else can European producers do? Here are my suggestions:

  • Companies need to “make their own demand” by more forcefully arguing the case for the societal and environmental value of what they produce (while, of course, also ensuring that what they produce has strong social and environmental values!).
  • A deeper dive into the opportunities in different end-use markets and geographies is the key.
  • Let’s take wire-and-cable grade low-density PE (LDPE) as an example. A lot more electricity transmission in Europe will have to be built to distribute renewable energy, which of course is an environmental gain and elsewhere in the world. Could European wire-and-cable LDPE producers be a leader in providing product to Africa?

This is a very different approach than during the 1993-2021 Supercycle, when booming demand was guaranteed. All producers had to do as ensure there was enough supply, preferably with low feedstock costs and efficient logistics.

Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

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