Free Report:
The Oil Industry is here to stay: A worldwide assessment of current issues
Free Energy Market Research Reports
Automotive
Batteries & Fuel Cells
Chemical Industry & Markets
Coal
Energy
Maps
Metals
Nuclear
Oil & Gas
Petroleum
Power
Renewables
Custom Research
Energy Events & Conferences
Contact
Terms & Conditions
Privacy
Home >
Spain Petrochemicals Report Q3 2010
Management Report
Published: June 2010
Pages: 59
Tables: For full details, please email keithw@cmsinfo.com
From: GBP 353.33 Buy Now!
Research from: Business Monitor International
Sector: Petroleum
The Spanish petrochemicals industry is suffering from both depressed domestic demand and a painfully slow recovery in export markets. Long-term prospects are dim, according to this latest ‘Spain Petrochemicals Report’ from BMI.
The Spanish petrochemicals industry is suffering from both depressed domestic demand and a painfully slow recovery in export markets. Long-term prospects are dim, according to this latest ‘Spain Petrochemicals Report’ from BMI.
BMI estimates that the Spanish petrochemicals market declined 15% year-on-year (y-o-y) in 2009 amid a collapse in the automotive and construction sectors, with primary plastics demand plummeting 25%. This compared with a 10.6% drop in EU petrochemicals output and a 19.7% drop in polymers output as demand across Europe slumped. Domestic consumption in key petrochemicals-consuming sectors such as construction and automobiles declined 17%. Consumer chemicals declined by up to 10% in line with the overall drop in domestic consumption, with paints down 20% and detergents down 5%. A 6% drop in chemicals prices brought further problems for Spanish producers, with turnover down to around 2005 levels, hurting small- and medium-sized enterprises the most. With exports - which represent 60% of sales for Spanish producers - also performing poorly, the local petrochemicals industry was in sharp decline, with output down by around 20%.
In 2010, the Spanish economy is set to contract by 0.6% following a 3.6% fall in 2009, representing the second consecutive year of decline that has been exacerbated by the slump in the construction sector which is dragging down polymer demand, particularly PVC. Meanwhile, engineering plastics have been hit by the downturn in the automotive industry, which has been adversely affected by both the recession and the long-term eastward shift in European carmaking. Although the Spanish automotive industry will begin to recover in 2010, BMI does not envisage a return to pre-recession levels of output for the foreseeable future. In retail trade, durable goods sales continue to suffer due to higher unemployment reducing the demand for large purchases. Meanwhile, the government’s EUR8bn stimulus plan, 'Plan E', came to an end in early 2010, which could create significant downside for local industries. In terms of exports, the eurozone economy remains weak and the appreciation of the euro against the US dollar makes Spanish exports outside the currency area highly uncompetitive in a challenging global market. In the longer term, European chemicals firms will find it difficult to compete with producers from emerging markets in Asia and the Middle East. According to Cefic, labour costs account for 14% of chemicals production in the EU and are a major factor weighing on competitiveness. What is more, labour cost per employee grew by 3.5% pa on average in the 10 years to 2007. Countries such as China and India, where labour costs are far lower, will gain a significant advantage unless European producers can use technological advances to create cost advantages.
With a very poor scenario ahead, BMI forecasts overall chemicals output growth of just 0.5%, although domestic restocking and 3% growth in exports should ensure 2.0% growth in the polymers segment. Modest growth rates should be seen in the context of very low base effects, with the industry requiring substantially higher rates of growth to survive. As such, BMI expects some outdated and smaller plants to be taken offline permanently, leading to shrinkage in available production capacity.
BMI estimates that the Spanish petrochemicals market declined 15% year-on-year (y-o-y) in 2009 amid a collapse in the automotive and construction sectors, with primary plastics demand plummeting 25%. This compared with a 10.6% drop in EU petrochemicals output and a 19.7% drop in polymers output as demand across Europe slumped. Domestic consumption in key petrochemicals-consuming sectors such as construction and automobiles declined 17%. Consumer chemicals declined by up to 10% in line with the overall drop in domestic consumption, with paints down 20% and detergents down 5%. A 6% drop in chemicals prices brought further problems for Spanish producers, with turnover down to around 2005 levels, hurting small- and medium-sized enterprises the most. With exports - which represent 60% of sales for Spanish producers - also performing poorly, the local petrochemicals industry was in sharp decline, with output down by around 20%.
In 2010, the Spanish economy is set to contract by 0.6% following a 3.6% fall in 2009, representing the second consecutive year of decline that has been exacerbated by the slump in the construction sector which is dragging down polymer demand, particularly PVC. Meanwhile, engineering plastics have been hit by the downturn in the automotive industry, which has been adversely affected by both the recession and the long-term eastward shift in European carmaking. Although the Spanish automotive industry will begin to recover in 2010, BMI does not envisage a return to pre-recession levels of output for the foreseeable future. In retail trade, durable goods sales continue to suffer due to higher unemployment reducing the demand for large purchases. Meanwhile, the government’s EUR8bn stimulus plan, 'Plan E', came to an end in early 2010, which could create significant downside for local industries. In terms of exports, the eurozone economy remains weak and the appreciation of the euro against the US dollar makes Spanish exports outside the currency area highly uncompetitive in a challenging global market. In the longer term, European chemicals firms will find it difficult to compete with producers from emerging markets in Asia and the Middle East. According to Cefic, labour costs account for 14% of chemicals production in the EU and are a major factor weighing on competitiveness. What is more, labour cost per employee grew by 3.5% pa on average in the 10 years to 2007. Countries such as China and India, where labour costs are far lower, will gain a significant advantage unless European producers can use technological advances to create cost advantages.
With a very poor scenario ahead, BMI forecasts overall chemicals output growth of just 0.5%, although domestic restocking and 3% growth in exports should ensure 2.0% growth in the polymers segment. Modest growth rates should be seen in the context of very low base effects, with the industry requiring substantially higher rates of growth to survive. As such, BMI expects some outdated and smaller plants to be taken offline permanently, leading to shrinkage in available production capacity.