Changes in the market for styrene will determine whether INEOS NOVA will further reduce capacity in Europe and North America, a company executive said on Thursday.
INEOS NOVA quickly started reducing styrene capacity after INEOS and NOVA Chemicals established the joint venture in the third quarter of 2007.
The reductions were made to improve margins, which have been squeezed by low demand and high costs in feedstock benzene.
Margins could improve further if benzene capacity increases, as announced by producers, said Steve Harrington, vice president of the global styrene business of INEOS NOVA. Harrington spoke on the sidelines of the DeWitt World Petrochemical Conference, held in Houston by Dewitt & Co.
Producers, however, have also announced plans to increase styrene production in the Middle East, Harrington said. Middle East producers have lower feedstock and energy costs, giving them an advantage over production in Europe and North America.
Middle East styrene could pressure margins if the product is exported to North America and Europe, Harrington said.
However, that new capacity could be absorbed by Asian countries if those economies continue to grow, he said.
Moreover, the Middle Eastern styrene projects could face delays, Harrington said.
Other chemical projects in the Middle East have been delayed, due, in part, to rising costs.
Due to the uncertainty surrounding the announced projects, INEOS NOVA has no immediate plans to further reduce styrene capacity, Harrington said. "We're watching how the market responds."
INEOS NOVA quickly started reducing styrene capacity after INEOS and NOVA Chemicals established the joint venture in the third quarter of 2007.
The reductions were made to improve margins, which have been squeezed by low demand and high costs in feedstock benzene.
Margins could improve further if benzene capacity increases, as announced by producers, said Steve Harrington, vice president of the global styrene business of INEOS NOVA. Harrington spoke on the sidelines of the DeWitt World Petrochemical Conference, held in Houston by Dewitt & Co.
Producers, however, have also announced plans to increase styrene production in the Middle East, Harrington said. Middle East producers have lower feedstock and energy costs, giving them an advantage over production in Europe and North America.
Middle East styrene could pressure margins if the product is exported to North America and Europe, Harrington said.
However, that new capacity could be absorbed by Asian countries if those economies continue to grow, he said.
Moreover, the Middle Eastern styrene projects could face delays, Harrington said.
Other chemical projects in the Middle East have been delayed, due, in part, to rising costs.
Due to the uncertainty surrounding the announced projects, INEOS NOVA has no immediate plans to further reduce styrene capacity, Harrington said. "We're watching how the market responds."
