Europe chems industry could be extinct in decade: INEOS chief

07 March 2014 10:55 Source:ICIS News

Jim Ratcliffe, INEOSLONDON (ICIS)--The European chemicals industry could be mostly wiped out within the next 10 years if regulators do not move to increase the region’s competitiveness, the chairman of Switzerland-headquartered chemicals producer INEOS said on Friday.

Writing in an open letter to European Commission president Jose Barroso, INEOS chief Jim Ratcliffe said that chemicals producers could go the way of the European textile industry, felled by an inability to respond to international competition, within the next decade.

He added that INEOS’ profits in Europe have halved in the last three years, while profits in the US - where energy costs are 50% below European levels - have tripled.

He noted that new builds and capacity ramp-ups are continuing apace in the Middle East, and that the re-opening of trade with Iran could add an additional 6m tonnes/year of ethylene capacity to the rising tide of potential cheap imports into Europe.

“I can see green taxes, I can see no shale gas, I can see closure of nuclear, I can see manufacturing being driven away. I can see the competition authorities in Brussels blissfully unaware of the tsunami of imported product heading this way and standing blindly in the way of sensible restructuring,” Ratcliffe said.

“We are rabbits caught in the headlights, and we have got our trousers down,” he added.

Ratcliffe estimates that $71bn-worth of petrochemicals expansions in the US could grow to over $100bn as producers move to capitalise on the country’s shale gas boom, and forecast that China - currently a key end market for producers - is likely to become increasingly self-sufficient in the next few years. It may become an exporter for some materials, he added.

Compared to the rapid growth in Asia, North America and the Middle East, there have been 22 chemical plant closures in the UK since 2009, and no new builds.

He added that the chemicals sector is worth $4,300bn, and that the sector rivals the automotive market in its $1,000bn annual revenues in Europe, and the loss of the industry would be a political as well as economical miss-step for the region.

“Strategically, and economically, no large economy should abandon its chemical industry,” he said.

“Chemicals depend upon competitive energy and feedstock costs. Whilst intensely technical as an industry, and one of the reasons historically that Europe has been so successful, technology alone will not save it,” he added.

By Tom Brown