Recently Released Market Study: United Kingdom Petrochemicals Report Q1 2013

Boston, MA -- (SBWIRE) -- 03/12/2013 -- The Q113 UK petrochemicals report examines recent trends in the British chemicals and petrochemicals industries and assesses whether producers will retain a competitive edge amid the continuing economic gloom. The report examines the effects of the eurozone crisis coupled with increased competition from Asia and the Middle East, opening the way for the UK to be increasingly import dependent in any future economic recovery. Furthermore, BMI analyses the growth and risk management strategies being employed by the leading players in the sector, as they respond to capacity cuts in refining and volatility in naphtha feedstock supply.

With surplus capacity likely to be a feature across Europe in 2013, the UK's competitiveness will determine the size of contraction; BMI envisages a decline in competitiveness in the labour force as well as a steady appreciation of the pound sterling against the euro. The UK is heavily exposed via financial and trade channels; a failure to stem the crisis would drive the economy back into recession. Given the high degree of financial and trade interdependency with the eurozone, a failure among European politicians to resolve the debt crisis could lead to contraction in British chemicals markets.

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BMI has revised the following forecasts/views:

- A collapse in the eurozone could wipe out any advantage in weakening naphtha feedstock prices, thereby hitting producers' bottom lines. Moreover, with upstream markets facing uncertainty and cracker margins still at historical lows despite the decline in naphtha prices, British producers are likely to be sceptical of any talk of a sustainable downtrend in feedstock costs.
- The UK scores 72.0 points in BMI's latest Western Europe Petrochemicals risk/rewards ratings (RRRs), unchanged from the previous quarter. However, it has fallen from fourth to fifth place, overtaken by Belgium which has seen an improvement in its country risk ratings. As a result, it has fallen 0.5 points behind Belgium and is 5.3 points ahead of Spain.
- BMI estimates that British chemicals output declined 7-8% in 2012, with the situation likely to stabilise in 2013 as the recovery feeds through to growth. However, the strength of demand will depend on both domestic manufacturing performance and external competitiveness against the Eurozone.

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