Abstract
Germany’s petrochemicals market will see greater stability in H209 but
it will remain in a trough, with
BMI’s latest Germany Petrochemicals
Report forecasting a 12.5% decline in both sales and output in
2009.
According to the Verband der Chemischen Industrie (Chemical Industry
Association, VCI), in H109
German chemicals production was down 15.5%
y-o-y, with capacity utilisation at just 72%. This came
amid a similar
decline in overall industrial output, although there were signs of a y-o-y
increase in
building and construction in Q2. Sales were down 16.5% y-o-y
to EUR69.7bn, with exports down 12.0%
to EUR62.3bn and imports down 10.0%
to EUR42.6bn. BMI forecasts a 12.5% drop in both output and
sales.
Speciality polymers, PVC and PP, will be particularly badly hit by the sharp
downturn in the
construction, automotive and consumer durables industries
and could see declines of around 20%. The
situation is unlikely to pick up
until H210. The situation will be made more difficult by large increases
in
capacity in the Middle East and Asia, with producers in the Middle East
enjoying significant feedstock
cost advantages. Consequently, BMI is
forecasting long-term annual growth of around 2%.
On the upside, Q209 saw
greater product price stability as many customers reduced their stocks and
began reordering, although throughout H1 petrochemicals prices were down 11%
y-o-y and polymers
were down 4.5% y-o-y. A force majeure on PVC plants in
Wilhemshaven, Schkopau and Rheinberg came
at a time of rising consumption,
but BMI believes that expectations of a tight PVC market and a recovery
in
prices are unlikely to be realised. The increase in consumption since the
beginning of 2009 merely
follows the market trend, but demand is still
down by up to 25% over 2008 and producers have been
unable to secure a
sustained rise in prices.
The styrenics sector is also witnessing cuts in
output. BASF announced that it would permanently close a
PS plant at its
Ludwigshafen site by June 30 because of a decrease in demand for PS. The plant
was idled
in mid-April. Meanwhile, in July 2009, Dow Chemical shut down
its 300,000tpa styrene plant at Boehlen
because of a technical problem. It
could not comment on how long the plant was expected to be offline.
Germany has petrochemicals capacities of 5.75mn tpa of ethylene, 1.55mn tpa of
HDPE, 1.13mn tpa of
LDPE, 810,000tpa of LLDPE, 2.23mn tpa of PP, 2.14mn
tpa of PVC and 530,000tpa of PS. BMI expects
companies to keep cutting
costs – including shutting down plants, cutting jobs and operating at
reduced
rates. With financing conditions still difficult, firms are also
likely to make more efforts to preserve cash,
resulting in delays to
large-scale investment projects. BMI envisages no increase in ethylene
capacities
over the next five years, which will restrict scope for further
downstream development. We also see little
scope for Germany to increase
its oil refining capacity from the current 2.39mn b/d. Further upgrading
should take place, but the medium-term implication is one of refined products
imports rising steadily.
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