Financial crisis affects transnational chemical companies to delay projects
June 28 19:02:14, 2018
Due to the continuous downturn in market demand caused by the financial crisis, multinational chemical companies have been making great efforts to reduce their expenditures and implement measures to reduce production. Following the LANXESS company, Dow Chemical and Huntsman also announced last week that they had postponed the original plan to build a new chemical plant. According to experts’ knowledge, the three companies announced the project’s postponement plan without exception and stated that after announcing the expansion project at this time last year, the market situation has undergone great changes. Analysts in the United States, a well-known chemical market consultancy, said that the current demand has shrunk dramatically and that the global capacity surplus has reached the most serious level ever. Many companies have adopted measures such as idle production capacity, reduction of inventory and expenses in response to the crisis. In the short term, the prospects for asset utilization in the chemical industry are still not optimistic, and the industry's profit margin may still remain at a low level, which means that companies still need to further rationalize their assets. Dow Chemicals delayed the plan to build a new energy-efficient chlor-alkali plant in Freeport, Texas, USA. According to the company’s original plan, the new chlor-alkali plant should be built in 2011 to replace the old factory that has been operating for many years. Chlorine is an important raw material for many chemical products of Dow Chemical. A Dow Chemical spokesman said that due to changes in the economic environment, the start time and progress of the project need to be reassessed. Dow Chemical CEO Li Weicheng said that Dow and Saudi Aramco’s joint petrochemical complex project in Ras Tanura, Saudi Arabia, is also likely to be postponed. He also said that Dow Chemical is currently taking active measures to increase the operating rate of petrochemical plants. At the end of December of last year, the operating rate of the Dow Chemical Plant fell to 44%, the lowest level in more than 20 years. Huntsman stated that it has postponed the design work of the 400,000-ton MDI (diphenylmethane diisocyanate) plant in the Netherlands. The company said that its existing MDI capacity can fully meet the needs of the polyurethane market. Tony Hankins, president of Huntsman's Polyurethane Business Unit, said: “We expect that as the global economic environment improves and consumer demand recovers, the market growth rate of MDI will return to a higher level. At that time, the project was reopened. Our project construction costs will be even lower and the project's profitability will be even higher.†At the end of 2008, LANXESS announced that it had postponed the start date of its rubber plant with a total investment of US$500 million in Singapore until later this year.