Closures of high-cost assets to accelerate in Europe, northeast Asia – ICIS

SANTIAGO (ICIS)–Announcements of closures for high-cost assets, especially in Europe and northeast Asia, are likely to accelerate in coming quarters as the global petrochemicals industry is forced to rationalize, according to an ICIS analyst on Tuesday.

Antulio Borneo, vice president for the polyethylene terephthalate (PET) and polyester chain at ICIS, said announcements of closures for steam crackers – the key facility to produce petrochemicals – in Europe are to accelerate after two key players already said they were shutting theirs.

Earlier in 2024, US energy major ExxonMobil said it was to shut its cracker in Gravenchon, France, and Saudi petrochemicals major SABIC said it would shut its facility in Geleen, the Netherlands.

“High-cost assets reside mainly in Europe and northeast Asia; the pressure to rationalize old and inefficient assets will intensify as time passes, but it will be expensive,” said Borneo.

“Announcements of permanent closures of chemicals plants are expected to gain momentum throughout 2024.”

Borneo was speaking at an event about logistics organized by the Latin American Petrochemical and Chemical Association (APLA).

The consultant went on to say that Europe’s crackers are, on average, nearly 45 years old, while those in northeast Asia – excluding China – are on average just over 30 years old.

With the global oversupply in petrochemicals expected to take years to be absorbed and take the market back into balance, those old assets are first on the line to be shut, concluded Borneo.

The APLA Logistica event runs in Santiago on 11-12 June.