European Chemical Producers profitable for now

HOUSTON – Crude oil price swings in recent months, combined with a devalued euro, have created a volatile, but profitable marketplace for European petrochemical producers, with European steam-crackers achieving record margins in fourth quarter 2014, according to analysis from IHS (NYSE: IHS), the leading global source of critical information and insight.

Petrochemical markets are heavily impacted by changes in the crude oil price, since crude oil, and in particular, its derivative naphtha, is an essential steam-cracker feedstock for the production of gasoline and numerous chemicals. Changes in crude oil prices influence not only the overall price level for petrochemicals like olefins and aromatics, but are also a primary driver behind changes in the supply and demand picture.

“After crude oil prices started dropping in the summer of 2014 descending to a low of approximately U.S. $46 per barrel in January 2015, entire value chains for chemicals and polymers went into a destocking mode, and buyers began postponing their buying decisions for as long as possible, waiting for prices to bottom out,” said Michael Smith, vice president of European chemicals, at IHS Chemical. “Now, crude oil prices are around $62 per barrel, consumption is improving, and buyers throughout the value chain are focused on restocking their inventories in a tight market. The challenge now for buyers is simply sourcing material, not negotiating on price, which is a welcomed advantage for European petrochemical producers. These producers are asking how long will these good times last? That question will drive much of our discussion in June, when the European petrochemical market players will gather in Athens for the IHS Chemical EMEA Aromatics and Olefins Conference.”

The IHS Chemical EMEA Aromatics and Olefins Conference will be held June 9-10, 2015, at the Divani Caravel Hotel in Athens. A full agenda and more information is available at

“Polymer and other petrochemical buyers are currently facing a once in a generation supply squeeze,” said Matthew Thoelke, director of olefins at IHS Chemical. “For buyers, the current market scenario is a perfect storm in reverse. At IHS, we see four main factors contributing to this unusual situation—buyers have an incentive to restock, European consumption is improving, imports are at reduced levels thanks to a devalued euro, and lastly, as a result of these factors, buyers of polymers face a virtual supply nightmare.”