A strong recovery in European sales for most thermoplastic resins is expected in the final quarter of 2009 as processors re-build stocks and economic recovery begins to take hold in Europe’s major economies as per AMI Consulting. Q4 2008 was one of toughest markets ever seen for thermoplastic resins with apparent demand shrinking by around 25% as converters destocked and orders for everything from automotive car parts to packaging stalled. Sharp destocking continued through Q1 2009 with volumes down by mid-year by around 15% on the previous year. Because much of the volume loss in Q4 2008 was destocking, resin sales are expected to be strongly up in Q4 2009 compared with last year. Predicting an overall decline of around 4% for 2009, AMI still foresees European underlying demand for thermoplastics down for the full year of 2009 compared with 2008. The market is mainly being driven by packaging, which now accounts for over half of all thermoplastic usage. Hygiene and medical markets are also still performing strongly, although these tend to be small markets in volume terms. Car production has remained weak, impacting demand for engineering resins and is not expected to pick up until after 2011. Research shows the polymer demand in Europe is increasingly pegged to GDP growth, which means that thermoplastic demand is reliant on a recovery in consumer spending and an increase in investments. A modest growth of 1-2% is anticipated in polymer demand for 2010 and slightly more robust growth of 2-3% for 2011 and 2012. However, even with this recovery it will take the European market until 2013 to recover to the volumes lost in late 2008.
In an earlier report, Chemical Market Associates Inc. (CMAI) reveals that the global economic recession severely impacted olefin demand growth in conjunction with the start-up of significant quantities of new capacity. After a severe contraction in light olefins demand growth in 2008, global demand growth for 2009 will remain significantly below trend-line growth, adding pressure to a severely over-supplied market. The margin forecast suggests that 2009 will mark the beginning of a sustained period of poor earnings for light olefins and petrochemical producers in general; even though H1 2009 showed positive earnings for a number of petrochemical producers in Asia and light-feedstock based producers in the United States. However, this was not the case for heavy-feedstock based producers in USA and Europe. Ethylene demand growth is forecast to respond with a modest recovery in 2009 followed by muted growth in 2010. Strong and steady ethylene demand growth averaging between 4-5% pa is not forecast to resume until the 2011-2014 period. As a result, the total ethylene consumption volume will remain below historical trend-line growth over the next five years. Capital investments will continue to shift toward areas that offer either advantaged feedstock costs, such as many Middle Eastern countries, or rapid demand growth as exemplified by China. In the more mature regions, such as Europe, Japan and North America, slow ethylene demand growth and a more competitive international marketplace are expected to limit investments in new capacity. Instead a greater focus on cost efficiencies should result in improvements of energy usage, greater feedstock flexibility and plant modernizations.
Propylene production from traditional sources, such as steam crackers and FCC units associated with refineries, is forecast to decrease, encouraging investment in "other" propylene sources. Output from steam crackers will be limited by mainly ethane-based capacity additions in the Middle East that yield less propylene, and the persistence of cost advantages for NGLs that will encourage flexible units to preferentially crack lighter feedstocks. In addition, future FCC production of propylene is expected to slow significantly mainly in response to changing motor gasoline regulations/specifications in USA which accounts for approximately one-third of global FCC propylene production. Investments in "other" propylene sources will be based predominantly on the established technologies of metathesis and propane dehydrogenation. However, significant investments in newer on-purpose propylene technologies, such as olefin and deep catalytic cracking, are taking place. In addition, the first commercialization of methanol-to-olefins technology is imminent, with three plants scheduled to come on stream in China in 2010, all based on coal.
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