Smart Sourcing Summit: Petrochemical supply is sufficient
"Significant excess capacity" will be evident by 2020
Tom Stundza -- Purchasing, 10/15/2009 9:52:23 AM
Petrochemicals capacity reductions continue in North America but supply will remain plentiful and prices will remain volatile. So says Charles Wardlaw, vice president of procurement for global manufacturing at BP Products North America.
He tells Purchasing's Smart Sourcing Summit in Chicago that there will be plenty of products coming from plants in North America and elsewhere in the years ahead. In fact, what U.S. and European oil company investments in new plants in oil and natural gas-rich regions of the Middle East will generate will be "significant excess" in global petroleum and petrochemical refinery capacity out to 2020.
That's why believes pricing will be generally flat as the North American recovery plods along in 2010. He suggests to the gathering that butadiene prices will stay flat in 2010, while propylene, benzene, toluene and paraxylene will be flat-to-down. Of the chemicals in discussion, naphtha and ethylene are the only ones predicted to be slightly higher next year.
Petrochemicals are chemical products made from feedstocks derived from petroleum or natural gas. Wardlaw says "there was a rapid market adjustment in petroleum and petrochemicals 2008" but demand dropped substantially as well, keeping supply somewhat ahead of demand. While some petrochemicals occasionally go into periods of tightness, imports have been able to cover demand, and be believes that trend will continue in the months ahead.
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