Recently published research from Business Monitor International, "France Petrochemicals Report Q3 2013", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 07/18/2013 -- With domestic GDP growth of -0.3% forecast in 2013 and external markets set to remain in the doldrums, BMI sees little grounds for optimism in the year ahead, although a slow recovery is expected from 2014. In the medium-term, the sector will struggle to recover fully from the precipitous decline in the aftermath of the 2008 financial crisis. With the eurozone sovereign debt crisis weighing heavily on the sector and undermining growth in both external and domestic markets, BMI does not envisage any rapid return to pre-crisis levels of output in the near future.
Modest growth in the index measuring chemicals, plastics and rubber output reported in the September- November period of 2012 was reversed in subsequent months as producers struggled with declining orders.
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The situation has been exacerbated by the unexpected shut-down of Total Petrochemical's 525,000tpa ethylene cracker at Gonfreville in April that affected 65,000tpa of butadiene production capacity.
The domestic market is weighing heavily on the industry's performance, affected in large part by the European sovereign debt crisis. The automotive industry - a key polypropylene (PP) consumer - saw output decline by an estimated 11.5% in 2012, according to BMI's Automotives team. At the same time, agribusiness declined 5.6%, thereby reducing domestic demand for ammonia and urea. Meanwhile construction contracted 0.4%, depressing demand for PVC.
Over the past quarter BMI has revised the following forecasts/views:
- The outlook for 2013 will be one of stability rather than decline, although this could be upset by a worsening of the eurozone sovereign debt crisis, which continues to weigh heavily on French petrochemicals production.
- Over the medium-term, there will be little to stimulate the petrochemicals market. Construction growth will remain anaemic, which should provide stability in the vinyls chain if not recovery, although France will not contribute much to overall European consumption growth.
- The prolonged downturn will prevent a return to pre-recession operating rates and by the time the market recovers, old, inefficient and smaller capacities are likely to have been taken offline. As such, French chemicals producers are increasingly looking beyond the eurozone to achieve growth, in particular to the US, Japan and emerging markets.
- France scores 73.5 points in BMI's petrochemicals ratings, down 0.2 points since the previous quarter due to a downward revision to its market risks score as a result of a worsening operating environment. Nevertheless, France has failed to retake the second place, remaining in third - 0.4 points behind the Netherlands and 1.0 point ahead of Belgium.
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