European polymer industry faces continued pressure

Dec. 29, 2014

The European polymer industry has come under pressure this year from producers in the United States and the Middle East, where cheap feedstocks have led to an expansion in capacity.

The European polymer industry has come under pressure this year from producers in the United States and the Middle East, where cheap feedstocks have led to an expansion in capacity.

Logistics group InterBulk said last week that its dry bulk business has been hit by temporary and permanent chemical plant closures in the polymer sector in Europe in 2014, and little relief is expected in 2015.

According to InterBulk, the market is still adjusting to the pressures on global flows and pricing from substantial capacity additions using cheap feedstock in the Middle East. In the coming years, the wave of new plastics capacity being constructed in the U.S. Gulf based on ethane from shale gas will pile further pressure on European producers.

The company, which provides logistics to the chemical, polymer, food and mineral industries, reported a pretax loss of £31.8 million ($49.4 million) for the 12 months ended September 30, compared with a loss of £12.9 million ($20 million) a year earlier, as revenue in the dry bulk unit declined and a reappraisal of revenue growth projections led to a goodwill impairment provision of £32.3 million ($50.2 million).

Transportation activity in the dry bulk division was down 11 percent year on year, and revenue from temporary storage declined by 18 percent. The major factor was plant closures in the U.K., which reduced export opportunities and resulted in a higher rate of empty repositioning back to the continent, InterBulk said.

"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," the company added.

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