The closure of high-cost petrochemical assets will accelerate

Analysts from global energy and chemical industry market information service provider ICis recently said that as the global petrochemical industry is forced to rationalize capacity, more and more companies may announce the closure of high-cost petrochemical assets in the next few quarters, especially in Europe and Northeast Asia.

In June, Icis vice president in charge of polyethylene terephthalate (PET) and polyester industry chain business, Bonio said that Europe will accelerate the announcement of steam cracking plant closure. Steam cracking plant is a key production facility for petrochemical products. Earlier this year, ExxonMobil said it would close its Gravenchon steam cracker in France, while SABIC said it would close its Heron steam cracker in the Netherlands.

"High-cost petrochemical assets are primarily located in Europe and Northeast Asia, and the pressure to rationalize older and less efficient assets will intensify over time," Bonio said. Expect more announcements of permanent closures of chemical plants in 2024. The average age of a steam cracker in Europe is close to 45 years, while the average age of a steam cracker in Northeast Asia (excluding China) is just over 30 years."

As the global glut of petrochemicals is expected to take several years to ease, these high-cost older assets will be the first to be shut down, Bonio said.