Global average chemicals industry capital expenditure (capex) remains muted amid forecasts of weaker global growth and the spectre of trade wars between key economies, investment bank UBS said on Monday.
Data from first-half financial reporting points to average capital expenditure standing at 7% of sales for the 2019-20 financial year, around 1.4 percentage points below levels in 2013-15, UBS said, in spite of the global economic rally seen over the last 12 months.
“We still see a low period of capex in petrochemicals globally especially relative to the ill-discipline of the 2012-15 period, albeit with a higher supply growth rate in the benchmark product ethylene in 2019,” UBS said in an investor note.
Industry caution may be in part due to global political uncertainty and the capacity of numerous incidents such as US sanctions on Iran and a US trade war with China to arrest global growth ratws, the bank added.
The International Monetary Fund (IMF) forecasts global GDP growth of 3.1% in 2018, but that rates over the following two years are likely to be softer as developed world growth slows and developing world recoveries plateau.
Muted average chemicals sector capex obscures some of the more ambitious investments certain producers are pursuing at present, UBS added, noting that a long-anticipated investment by Germany’s Covestro in significant new methyl diphenyl diisocyanate (MDI) capacity may be announced soon.
BASF’s $10bn bet on a new verbund site in China will figure in capex estimates within the next few years, UBS added, while Saudi Arabian producers continue to invest strongly in crude-to-chemicals projects.
INEOS’ $3bn new European petrochemical complex, including the first ethylene cracker to be built in the region in two decades, is another example of large-scale bets in spite of prevailing industry caution, UBS added.
By Tom Brown
Source: ICIS News
The investment enables the steam cracker to increase the share of renewable and recycled raw materials used in its (ethylene and propylene) production. The move supports the Borealis Strategy 2030 for a circular economy. The Porvoo investment program is expected to be completed in 2025.
Murray Auchincloss, bp’s CEO, said in a statement: “As I set out in February, BP’s destination from IOC [international oil company] to IEC [integrated energy company] is unchanged – and we need to deliver as a simpler, more focused, and higher-value company.
Founded in 1972, Tecnofilm has expanded its product portfolio over the years to offer a wider range of compounds and functional polymers for various industrial applications and technical articles. The company has patented several of its products.
