France Petrochemicals Report Q2 2012 Published : March 2012
No. of Pages : 45
Output in 2011 was supported by household spending and export growth, although these diminished as the year progressed. French chemical industry association UIC has cut its growth forecast for the country's chemical output for 2012 to 1.8% from 2.4%, due to the economic crisis and delays in restocking. BMI forecasts a decline in industrial production growth from an estimated 2.9% in 2011 to 1.7% in 2012, but the petrochemicals sector is highly sensitive to the economic cycle, so the industry will be heavily affected by this anticipated downturn, and can be expected to lag the still-struggling wider economy. On the upside, inventory levels have been kept low, and we do not anticipate the kind of shock experienced in Q408. This should ensure a measure of price stability, should demand slump. The French petrochemicals industry will undergo the same process of ‘delocalisation’ as other industrial sectors. In the longer-term, however, we believe French production remains susceptible to production erosion, if not complete factory closures, particularly in the automotive sector, which is a major consumer of engineering plastics. For domestic production, the influx of imports remains a point of concern. Raw material supplies and the volatility of short-term costs are also areas of uncertainty for sustaining margins. Added to this are regulatory pressures as well as uncertainties associated with political events in the Middle East and the next round of elections in France. Downside risks include inflationary pressures and changes in purchasing power, which could affect demand for consumer goods. Stalling consumer confidence and fiscal cuts will start to weigh on household spending, while unemployment is set to remain above pre-crisis 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. France scores 73.3 points in BMI’s petrochemicals ratings, up 1.6 points since the previous quarter. As a result, France rises from third to second place in BMI’s Western European petrochemicals ratings, lying 8.1 points behind Germany and 0.9 points ahead of the Netherlands. France’s score has been undermined by poor long-term financial and external ratings as well as the effects of strike action on the marketrisk environment, but its country risk scores are now improving. 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 shutdowns in coming years, although its situation is not unique in Western Europe. France Petrochemical Industry Executive Summary . 5 SWOT Analysis . 6 France Political SWOT .. 6 France Economic SWOT 6 France Business Environment SWOT 7 Global Overview ... 8 Petrochemicals Market Overview .. 8 Table: World Ethylene Production By Country, 2011 And 2016 (‘000 tonnes capacity) ... 8 Financial Results . 12 Table: Financial Results Of Major Petrochemicals Companies, 2010 12 Global Oil Products Price Outlook .. 12
European Petrochemicals Overview 18 France Market Overview 23 Industry Trends And Developments 24 Business Environment Ratings 27 Table: Western Europe Petrochemicals Business Environment Ratings .. 27 Industry Forecast Scenario ... 29 Table: France’s Chemicals And Petrochemicals Sector, 2008-2016 (‘000tpa, unless otherwise stated) . 30 Macroeconomic Outlook ... 32 Table: France – Fiscal Policy, 2008-2016 (EURbn, unless otherwise stated) 34 Company Profiles ... 35 Arkema . 35 Total 37 Glossary of Terms .. 40 Table: Glossary Of Petrochemicals Terms .. 40 BMI Methodology ... 41 How We Generate Our Industry Forecasts .. 41 Chemicals and Petrochemicals Industry .. 41 Cross Checks ... 42 Business Environment Ratings . 43 Table: Petrochemicals Business Environment Indicators And Rationale . 43 Weighting . 44 Table: Weighting Of Indicators ... 44 Table: World Ethylene Production By Country, 2011 And 2016 (‘000 tonnes capacity) . 8 Table: Financial Results Of Major Petrochemicals Companies, 2010 . 12 Table: Western Europe Petrochemicals Business Environment Ratings . 27 Table: France's Chemicals And Petrochemicals Sector, 2008-2016 (‘000tpa, unless otherwise stated) . 30 Table: France – Fiscal Policy, 2008-2016 (EURbn, unless otherwise stated) . 34 Table: Glossary Of Petrochemicals Terms . 40 Table: Petrochemicals Business Environment Indicators And Rationale . 43 Table: Weighting Of Indicators . 44"