Germany Petrochemicals Report Q4 2009

Germany Petrochemicals Report Q4 2009

Germany’s petrochemicals market will see greater stability in H209 but it will remain in a trough, with
BMI’s latest Germany Petrochemicals Report forecasting a 12.5% decline in both sales and output in
2009.
According to the Verband der Chemischen Industrie (Chemical Industry Association, VCI), in H109
German chemicals production was down 15.5% y-o-y, with capacity utilisation at just 72%. This came
amid a similar decline in overall industrial output, although there were signs of a y-o-y increase in
building and construction in Q2. Sales were down 16.5% y-o-y to EUR69.7bn, with exports down 12.0%
to EUR62.3bn and imports down 10.0% to EUR42.6bn. BMI forecasts a 12.5% drop in both output and
sales. Speciality polymers, PVC and PP, will be particularly badly hit by the sharp downturn in the
construction, automotive and consumer durables industries and could see declines of around 20%. The
situation is unlikely to pick up until H210. The situation will be made more difficult by large increases in
capacity in the Middle East and Asia, with producers in the Middle East enjoying significant feedstock
cost advantages. Consequently, BMI is forecasting long-term annual growth of around 2%.
On the upside, Q209 saw greater product price stability as many customers reduced their stocks and
began reordering, although throughout H1 petrochemicals prices were down 11% y-o-y and polymers
were down 4.5% y-o-y. A force majeure on PVC plants in Wilhemshaven, Schkopau and Rheinberg came
at a time of rising consumption, but BMI believes that expectations of a tight PVC market and a recovery
in prices are unlikely to be realised. The increase in consumption since the beginning of 2009 merely
follows the market trend, but demand is still down by up to 25% over 2008 and producers have been
unable to secure a sustained rise in prices.
The styrenics sector is also witnessing cuts in output. BASF announced that it would permanently close a
PS plant at its Ludwigshafen site by June 30 because of a decrease in demand for PS. The plant was idled
in mid-April. Meanwhile, in July 2009, Dow Chemical shut down its 300,000tpa styrene plant at Boehlen
because of a technical problem. It could not comment on how long the plant was expected to be offline.
Germany has petrochemicals capacities of 5.75mn tpa of ethylene, 1.55mn tpa of HDPE, 1.13mn tpa of
LDPE, 810,000tpa of LLDPE, 2.23mn tpa of PP, 2.14mn tpa of PVC and 530,000tpa of PS. BMI expects
companies to keep cutting costs – including shutting down plants, cutting jobs and operating at reduced
rates. With financing conditions still difficult, firms are also likely to make more efforts to preserve cash,
resulting in delays to large-scale investment projects. BMI envisages no increase in ethylene capacities
over the next five years, which will restrict scope for further downstream development. We also see little
scope for Germany to increase its oil refining capacity from the current 2.39mn b/d. Further upgrading
should take place, but the medium-term implication is one of refined products imports rising steadily.

Executive Summary .5
SWOT Analysis....6
Germany Political SWOT 6
Germany Economic SWOT ...6
Global Market Overview7
Global Ethylene Capacities ..7
Table: World Ethylene Production By Country, 2008 And 2013 (‘000 tonnes capacity) .7
Polypropylene.10
Global Oil Products Market Review..13
Table Global Oil Prices, 2003-2013 (US$ per barrel)17
European Overview18
Regulation..18
Table: Key Elements Of REACH...19
Production .20
Germany Market Overview...21
Market Structure..21
Insight Into The Competitive Arena ...22
Germany Petrochemicals Business Environment.26
Table: Western Europe Petrochemicals Business Environment Ratings....26
Limits Of Potential Returns.26
Risks To Realisation Of Returns ...27
Industry Trends And Developments ...28
Financial Results .29
Industry Forecast Scenario ...30
Table: Germany – Petrochemicals Industry, 2007-2013..30
Table: Germany’s Cracker Industry, 2006-2012(‘000 tonnes) ...31
Macroeconomic Outlook32
Germany – Economic Activity..34
Company Monitor...35
BASF Aktiengesellschaft (BASF) ..35
BP Refining & Petrochemicals GmbH....37
Helm Aktiengesellschaft.39
Lanxess AG40
Country Snapshot: Germany Demographic Data ..41
Section 1: Population41
Section 1: Population41
Table: Demographic Indicators, 2005-203041
Table: Rural/Urban Breakdown, 2005-2030 ....42
Section 2: Education And Healthcare42
Table: Education, 2002-2005 ..42
Table: Vital Statistics, 2005-2030.42
Section 3: Labour Market And Spending Power ....43
Table: Employment Indicators, 2001-2006..43
Table: Consumer Expenditure, 2000-2012 (US$) ..44
Table: Average Annual Manufacturing Wages .44
BMI Methodology ...45
How We Generate Our Industry Forecasts ..45
Chemicals And Petrochemicals Industry 45
Cross Checks ..46
Business Environment Ratings.47
Table: Petrochemicals Business Environment Indicators And Rationale...47
Weighting...48
Table: Weighting Of Indicators ....48