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Despite the recent turmoil on the European petrochemical market, Germany will remain the strongest player in the region, a new report from BMI Research finds. Current demand in the petrochemical market is very close to the peak recorded before the financial crisis took hold in 2008.

The latest Germany Petrochemicals Report revealed that the market has been driven by small and medium-sized petrochemical companies that manufacture high-value niche products with relatively stable demand. Still, the report estimates that the market growth for 2013 will reach 0.8 percent, down from its previous forecast for a 1.5-percent increase.

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Similarly, BMI's output predictions were also revised, bringing the volume growth estimate down to one percent from the 1.5 percent it previously forecast. This means that the German petrochemical industry will need at least two years to recover from the output drop of 3 percent recorded in 2012.

While small-scale capacity is being closed in an effort to cut costs and to boost competitiveness, some large chemical companies like BASF are planning to launch new capacity. BASF is preparing to open a new TDI complex, most likely located at its Ludwigshafen site, before the end of this year. The new plant is expected to operate at a maximum capacity of 300,000 tpa, the report stated. Overall there has been a slight decline in basic chemicals capacities, following the closure of 100,000 tpa of PP and 240,000 tpa of ethylene capacity by LyondellBasell in 2012.