Sector News

European recovery underpins new petchems capacities, but challenges remain

March 7, 2018
Chemical Value Chain

The European chemical industry continues facing structural challenges but it is benefitting from an improved business climate that is underpinning plans for new olefins capacities in the region, an industry executive said on Wednesday.

Chemicals output rose by 3.6% in 2017 year on year and chemical prices also increased, while capacity utilisation reached the second highest level since the first quarter of 2011, according to Stefano Soccol, vice president for intermediates at Italian petrochemical producer Versalis.

Soccol was citing figures released earlier this month by European chemical trade group Cefic.

He said that the favourable conditions in Europe had led to announcements of new capacity that have not been seen for some time, such as new propane dehydrogenation (PDH) capacity plans in Europe.

European chemical majors like INEOS, Borealis and Grupa Azoty have all announced PDH new capacities, while INEOS has also plans to add up to 900,000 tonnes/year of ethylene capacity by expanding its existing crackers.

Soccol said while there are positive signals in the European chemicals industry, there are also some difficulties.

He referred to the threat of imports from the US and the Middle East, especially in view of the increasing petrochemical capacities in the US as a result of the shale gas boom.

Europe continues to be the highest priced feedstock region, said Soccol, although he said he was mindful that the gap in prices between the other regions has narrowed and some stability in feedstocks is expected going forward.

Sizeable regulatory cost pressure is another challenge facing the European chemical industry, along with growth of research and development (R&D) activities in China, which is outpacing other regions like the EU, he said.

China’s strong commitment to R&D and new technology is likely to reduce imports into Asia, he concluded.

Soccol was speaking at the 13th ICIS Olefins conference in Barcelona which runs on 7 March.

By Heidi Finch

Source: ICIS News

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