New market study, "Spain Petrochemicals Report Q3 2016", has been published
New Energy research report from Business Monitor International is now available from Fast Market Research
[ClickPress, Tue Jul 12 2016] Structural adjustments within the petrochemicals sector have been crucial to put it on a more competitive footing. As a result, the industry has less capacity to capitalise on future market growth opportunities and growth will eventually hit capacity constraints, thereby fuelling import growth.
The country's domestic markets are seeing uneven growth, with construction falling behind the automotive industry. The former represents the large bulk of polyvinyl chloride (PVC) and polypropylene (PP) pipe consumption, while the latter requires a diverse range of products including PP, polyurethanes (PUs) and synthetic rubbers. With construction stagnating, it will be the solid growth in the automotive industry that stimulates petrochemicals demand with a resultant pull on certain market segments.
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The Spanish chemicals and petrochemicals industry continued to post solid growth figures in Q116, following a steady growth performance in 2015. Chemicals output was up 3.7% y-o-y, plastic rose 2.9% and rubber was up 4.0% in the quarter. Production indices were also well above 2010 levels and the sector has made a strong recovery since the collapse in output in 2013.
Export growth will be a crucial factor and should continue through 2016. Additionally, Spain's economic recovery will outpace the eurozone, lifting domestic demand for petrochemicals end-products. Nevertheless, rising political uncertainty will pose one of the main risks to the country's economic recovery, with the December 2015 election likely to create uncertainty going forward.
Indorama has indicated that it will conduct a debottlenecking project at its polyester chain complex at Guadarranque-San Roque, Cadiz. It currently produces 220,000tpa of purified isopthalic acid, 175,000tpa of polyethylene terephthalate (PET) and 325,000tpa of purified terephthalic acid (PTA). The amount of new capacity was not indicated at the time of writing.
In BMI's European Petrochemicals Risk/Reward Index, Spain scores 67.7 points, unchanged since the previous quarter as a result of continued improvement in economic circumstances as well as growth in production. Investor sentiment is generally positive, with new compounding and processing facilities being started up, although Spain is unlikely to fully recover over the medium term, and petrochemicals capacity will remain lower than before due to permanent plant closures. However, Spain retains sixth place in our regional rankings, behind France and ahead of Italy.
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