Market Report, "France Petrochemicals Report Q2 2011", published

March 19, 2011 - PRLog -- An end to restocking and a slowdown in growth will lead to slower rates of growth in 2011 with a return to pre-crisis levels of output not expected in the short term, according to BMI's latest France Petrochemicals Report.

The Union des Industries Chimiques (UIC, Chemical Industries Union) estimated chemicals market growth at 10% in 2010, higher than the 9% it had originally forecasted. In reality, the petrochemicals sector remains in an historic slump, following a 20-25% fall in output in 2009, and will struggle to return to pre-crisis levels. The strength of recovery in the chemicals market during 2010 - driven by a resilient consumer - is unlikely to be carried through into 2011 in our view. Stalling consumer confidence and fiscal cuts will start to weigh on household spending, while unemployment is set to remain above precrisis levels, particularly among the under-25s. Tighter fiscal policy and ongoing spare capacity will also limit fixed investment growth. On the political side, strike action is likely to be a continuing problem for the industry, leading to disruptions in output and possible long-term consequences for some plants.

While the economy as a whole is expected to continue recovering, with GDP growth rising to 1.7% in 2011 from an estimated 1.5% in 2010, the petrochemicals industry will see lower growth in 2011, still operating below par. The UIC is forecasting 3% growth as stock levels return to normal, but BMI has a more pessimistic outlook with a forecast of 2.5% growth in line with the European average. Private consumption should provide some relief, but we do not expect a fundamental recovery in household spending to get under way until 2012 at the earliest.

BMI believes that the industry's lack of competitiveness both in the EU and beyond will lead to significant cutbacks in capacity. It will take until 2012 before the industry can return to pre-recession operating rates and by that time old, inefficient and smaller capacities are likely to be taken offline. Already, Total's petrochemicals complex in Carling has seen a 220,000tpa reduction in ethylene capacity and the planned closure of the Dunkerque refinery will remove 90,000tpa of polymer-grade propylene as well as naphtha feedstock supply to downstream units. Many French plants are too small to compete against new world-scale facilities in the Middle East and Asia, which have an advantage in access to cheaper ethane feedstock and lower operating costs. The French petrochemicals market is also set to diminish as a proportion of the global market as China and other Asian markets increase in importance. The secular decline in production will also be exacerbated by the long-term fall in demand from petrochemicals-consuming industries, notably the automotive sector, which is not expected to return to pre-recession rates of production in the next five years.

France scores 71.9 points in BMI's petrochemicals ratings, putting it in second place in our Western European Petrochemicals Ratings, 8.0 points behind Germany and 0.9 points ahead of Belgium. France's score has been undermined by poor long-term financial and external ratings as well as the effects of strike action on the market risk environment. The petrochemicals sector needs to overcome deterioration in external competitiveness and stagnation in domestic demand to hold on to the capacity it has and prevent closures. France's score is in danger of being eroded by capacity shut-downs in coming years, although its situation is not unique in Western Europe.

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Report Table of Contents:

SWOT Analysis
- France Political SWOT
- France Economic SWOT
- France Business Environment SWOT
Global Overview
- Petrochemicals Market Overview
- Financial Results
Global Oil Products Price Outlook
- Table: Oil Product Price Assumptions, Q410-Q411 (US$/bbl)
- Table: Oil Product Price Data And Forecasts, 2008-2015 (US$/bbl)
European Petrochemicals Overview
- Table: Financial Results Of European Petrochemicals Producers, Q110 (EURmn)
France Market Overview
Industry Trends And Developments
Business Environment Ratings
- Table: Western Europe Petrochemicals Business Environment Ratings
Forecast Scenario
- Table: France's Chemicals And Petrochemicals Sector, 2007-2015 ('000tpa, unless otherwise stated)
Macroeconomic Outlook
- Table: France - Economic Activity; 2006-2015
Company Monitor
- Arkema
- Total
Glossary Of Terms
- Table: Glossary Of Petrochemicals Terms
BMI Methodology
- How We Generate Our Industry Forecasts
- Chemicals and Petrochemicals Industry
- Cross Checks
- Business Environment Ratings
- Table: Petrochemicals Business Environment Indicators And Rationale
- Weighting
- Table: Weighting Of Indicators

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.