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United Kingdom Petrochemicals Report Q1 2009Published by: Business Monitor International Published: Mar. 12, 2009 - 53 Pages Table of Contents
AbstractWith the financial crisis gripping the country, the British petrochemicals industry is facing extremelychallenging conditions. Some firms are already preparing to shutter capacity amid a downturn in domesticand export markets, according to BMI’s latest UK Petrochemicals Report.Even before the full extent of the global financial crisis on the UK economy could be assessed, Britishpetrochemical producers were expected to report lower cash flows in the short to medium term due todeclining demand in the European market and the effect of new capacity coming online in the MiddleEast and Asia in 2009. The UK economy looks to be the worst prepared of the G7 countries to withstandthe credit crunch, with a sharp recession ahead. Manufacturing will be hardest hit, while the constructionindustry will contract markedly with the collapse of the housing market. BMI forecasts a 2.0% fall inGDP in 2009, which may prove to be optimistic. We expect growth to be sluggish in 2010 at 1.1%, and itwill take until 2012 for the UK to post above-trend growth of 3.0%. The strongly pro-cyclical nature ofthe UK petrochemical industry means that it could post a fall of 8-10% in production volumes in 2009. Despite the pick-up in the economic situation from 2010, BMI believes that the massive growth in Asianand Middle Eastern petrochemicals capacity will continue to depress prices, possibly leading to theclosure of some units. The global economic slowdown and financial crisis have adversely affected the British petrochemical andchemical industry, with a series of plant closure announcements in Q408 and early 2009. In January 2009,Invista announced the closure of the company’s nylon polymer and intermediates manufacturingcomplex at Wilton, although no date was specified. It said the decision was prompted by a shift indemand for nylon intermediates and polymer to Asia, with Europe now suffering over-capacity. In thesame month, PolymerLatex announced it would mothball its latex plant at Bromsgrove by March due to‘weak demand and a poor industry outlook’. In December 2008, Dow Chemical said it would close itsKing’s Lynn latex manufacturing plant due to ‘rapidly changing market conditions, such as thecompetitiveness of the raw material position, the small scale and the age of the facilities, as well as theoutlook for the global latex market.’ The UK scores 73.6 points in BMI’s Western European Petrochemicals Rankings, down 0.4 points sincethe previous quarter due to deteriorating market conditions. The decline in its score has pushed it 0.1points behind France but the UK remains 1.7 points ahead of Belgium, and in third place. BMIanticipates a further decline in its score as its country risk score declines, with the prospect of a fall in itspetrochemicals market scores if producers decide to close down plants. Get Full Details About This Report >> |
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