Boston, MA -- (SBWIRE) -- 01/08/2013 -- The Spain Petrochemicals Report examines the short-term impact of the eurozone crisis on the domestic industry and also assesses the long-term structural changes to the global petrochemicals industry. The report will look closely at the potential for growth in the Spanish polymer segment at a time when there is both heightened risk and low levels of consumer confidence, particularly as the domestic construction industry lurches from one crisis to the next. It also analyses whether Spain has the ability to compete against the growing number of integrated facilities in the Middle East and Asia, with its ageing units generally functioning at a far lower capacity than producers in these regions.

The chemicals sector reported a positive performance in H112. Official statistics reveal that monthly growth in the chemicals production index averaged 1.5% year-on-year (y-o-y) over the period, although output fluctuated as a result of market volatility. However, the situation in the rubber and plastic segment continued to deteriorate, albeit from a relatively strong base. On average, the rubber and plastic production index declined 8.6% every month in H112, continuing on a downward trend that had been evident since April 2011. The housing market has slumped, leading to a further contraction in the volumes of PVC used in construction applications. Additionally, packaging and consumer durables will be hit by high unemployment, thereby depressing demand for all grades of polyethylene (PE) and polypropylene (PP).

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Cracker closures have lasted longer than expected, partly in response to the prevailing market conditions. By August 2012, Repsol had yet to announce a restart date for its Puertollano cracker following closure due to a fire the previous month. Meanwhile, Dow was still in the restart phase at its 675,000 tonnes per annum (tpa) Tarragona cracker.

Over the last quarter BMI has revised the following forecasts/views:

- Spain scores 66.7 points, leaving it in sixth and last place in our Western Europe Petrochemicals Risk/Reward Ratings (RRRs). It lies 4.3 points behind Belgium. - The Spanish petrochemicals industry will continue to suffer because of the economic downturn, mirroring a trend seen in its export markets. With the domestic market in the doldrums, the petrochemicals industry is reliant on exports for growth. - PP is likely to lead plastic production growth in the years ahead as it is more heavily influenced by export-oriented industries that are set for recovery from H213. Meanwhile, PE will pick up as consumer demand recovers. The outlook for poly vinyl chloride (PVC) is gloomier due to a domestic slump in construction, lacklustre growth in the eurozone and a challenging global competitive environment. The most promising area for growth in plastics has come from the polyethylene terephthalate (PET) segment, with production coming back online over 2012.

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