MOSCOW (MRC) -- European polymer markets would continue to come under pressure from new capacity in the US that is being driven by shale gas and other cheap feedstock and energy regions, as per Plasticsnews.
The group, which transports dry and liquid goods and materials around the world, said its dry bulk division had been heavily impacted by what it called "weakness and volatility in the European polymer markets" and plant closures in the UK. Its overall revenue for the year to 30 September 2014 of GBP256.3 mln was 6% lower than in 2013, "mainly due to closures of manufacturing units in the European polymer industry". Interbulk said this included the closure of production plants by its customers, both on a temporary and permanent basis, which affected volumes and equipment balances. Transportation activity, as measured by moves performed, was down 11% year-on-year, and the revenue from temporary storage declined by 18%.
"The major factor was plant closures in the UK," the group said in a statement. "Export opportunities as a result reduced leading to higher empty repositioning back to the continent. It will take some time to mitigate these plant closures given the continued pressure on European polymer producers from regions with access to cheap feedstock and energy.” Interbulk said the European polymer market was still adjusting to the pressures on global flows and pricing from substantial capacity additions using cheap feedstock in the Middle East, "and the wave of new plastics capacity being constructed in the US Gulf based on ethane from shale gas will simply heighten this pressure on the European producers in the coming years".
Loek Kullberg, Interbulk’s chief executive, said the group believed there would be some expansion of European production in the PET sector, where it had a large market share, next year. "However, this market also continues to be challenged by increased imports from outside Europe coinciding with sluggish demand growth from the wider economic issues in Europe. As a result, the revenue outlook remains both uncertain and volatile depending on the success in highly competitive export markets.
As MRC wrote before, most of European chemical industry will face closure within the next 10 years, if regulators do not move to increase the region’s competitiveness, said INEOS' Chairman Jim Ratcliffe in his open letter to President of European Commission Jose Manuel Barroso. Worldwide, the chemicals sector has revenues of USD4.3 trillion. That’s bigger than the GDP of Germany and considerably bigger than the automotive sector at USD2.6 trillion. In Europe, chemicals and automotives share top billing with USD1 trillion each.
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