SCOB: Europe petrochemicals due for slowdown

France and Europe must expect a low petrochemical cycle in the medium term, warned Jean-Louis Besson, president of the French trade group Syndicat de la Chimie Organique de Base (SCOB), June 6 in Paris.

Doris Leblond
OGJ Correspondent

PARIS, June 14 -- France and Europe must expect a low petrochemical cycle in the medium term, warned Jean-Louis Besson, president of the French trade group Syndicat de la Chimie Organique de Base (SCOB), June 6 in Paris. Even though last year ethylene production in France grew 2.1% over 2005, performance fell 1.9% in the rest of Europe where there were more turnarounds and technical mishaps.

Besson said European activities will be put under increasing pressure by strong competition from higher costs for labor, energy, and raw materials "in the face of emerging powers in Asia and the Middle East" that already have an advantage and "don't need, in addition, to respect the same standards" as Europe.

While world ethylene demand—driven mainly by Asia—is growing by some 4%/year and propylene demand by some 4.5%/year, in mature areas such as Europe and North America, the growth rate for ethylene was practically flat and for propylene was less than 1%, Besson said.

For 2006-12 he foresees ethylene, propylene, and styrene demand growing by an average 1.8% in Europe and in North America compared with China's 8.9%.

The world's polymer market should grow by an average 4.8%, pulled along by NE Asia, said Besson.

Meanwhile in Western Europe, including Switzerland and Norway, plastics recycling was further slowing net demand, even though large amounts are exported to China.

Projects on hold
With a number of new petrochemical projects currently on hold in the Middle East and Asia because of high costs and skilled workforce shortages, Besson sees the crunch for mature markets coming by the end of 2008 as new units are due on stream and lower ethylene production costs in the Middle East do not deter operators from exceeding demand capacities.

If demand should fail in Asia, the surplus would go to Europe and North America, he said, noting that during 2007-12 the Middle East would be able to arbitrate between these mature regions and Asia.

Besson urged Europe's petrochemicals industry to meet these challenges by employing innovation, research into new molecules, technology, operational excellence, cost control, and improved energy efficiency.

Energy efficiency will be paramount in dealing with carbon dioxide national allocation plans during 2008-12, which will cover steam crackers, and in meeting environmental expectations. Besson sees this as both a constraint and an opportunity to revisit high energy-consuming ethylene processes to achieve higher energy efficiency and exceed achievements gained since the seventies.

Besson, who also is chairman and CEO of Total Petrochemicals France, pointed to the €400 million the group will spend in 2006-11 to improve the competitivity of its Carling and Gonfreville sites in France by merging their styrene productions and by introducing new technology in a restructuring process "to save 30% of energy."

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