2012-01-15 01:33:12 - Fast Market Research recommends "Germany Petrochemicals Report Q1 2012" from Business Monitor International, now available

The German chemicals and petrochemicals market continued its strong performance in H111 as demand returned to pre-recession norms, spurring investment in high-end production capacity in Germany, according to BMI's latest Germany Petrochemicals Report. In H111, German chemicals output rose 6.5% y-o-y while the value of sales grew 12% y-o-y, to EUR90.5bn, assisted by a 5.5% rise in prices. Many plants have reached full capacity utilisation - the chemicals industry overall was operating at around 88% capacity in H111 - and operations are enjoying record high production and sales figures. In response, BMI has revised up its full-year forecast for chemicals output from 4% to 5% on the back of a 10% rise in domestic demand. The German chemicals market, which

represents a quarter of EU sales, will be pivotal to growth in overall European chemicals production. With the domestic industry now faced with capacity constraints, growth in demand will increasingly favour imports. The strength of the euro will be crucial in determining the origin of imports. We have revised up our euro exchange rate forecasts versus the US dollar, against a backdrop of the widening interest rate differential in the euro's favour, which should benefit exporters to the eurozone. BMI believes main beneficiaries of anticipated German import growth will be producers in the Middle East. However, key market growth drivers will be in high-end specification plastics and speciality chemicals, rather than the basic chemicals and polymers traded by producers in the Gulf region. This should, in due course, spur investment in expanding existing capacities and increasing R&D with a focus on German operations. Lanxess is in the process of expanding some specialised petrochemicals derivative plants in Germany with a planned 40% rise in hydrogenated nitrile butadiene rubber (HNBR) capacity at Leverkusen by April 2012. Current capacity was not disclosed. Meanwhile, Evonik Industries is building a functionalized polybutadiene plant at Marl that will come onstream in Q312, which will allow the company to offer hydroxyl-functionalized polybutadiene to its customers in the adhesives and sealants market. BASF is planning a 17% expansion of its production of extruded PS insulation material - Styrodur C - for rigid foam panels at Ludwigshafen by end-2011 amid 3-5% expected annual growth in the European XPS market. BASF is also increasing the compounding capacity for its Ultramid nylon engineering plastics and Ultradur polybutylene terephthalate facilities at Schwarzheide. The project is due for completion in mid-2012, adding 10,000tpa of compounding capacity; the company is expected average annual growth of over 5% in Europe following double-digit growth in 2010 and 2011. Additionally, BASF is planning to build 300,000tpa integrated toluene diisocynate (TDI) complex in Europe, possibly at its Ludwigshafen site, by 2014. A final decision on the site was expected in Q311 and completion is expected by 2014. Bayer MaterialScience (BMS) is also reactivating a project to build a Germany Petrochemicals Report Q4 2011 © Business Monitor International Ltd Page 6 300,000tpa TDI plant at Dormagen, due to come onstream in 2014 and replacing the company's existing TDI facilities at Dormagen and Brunsbüttel. At the same time, there is a retreat from basic chemicals in Germany with Shell Chemicals closing its 2B Rheinland steam cracker at the Wesseling refinery complex by the end of 2011, and ending production of benzene and toluene at the plant by the end of 2012. The 2B cracker has capacity for 240,000tpa of ethylene and is relatively uncompetitive because it is not world scale.
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