Huntsman - 2010 and 2011 Will Be More Difficult Than 2009

We can expect 2010 and 2011 to be difficult years for commodity chemical producers. That's the view expressed by Peter Huntsman, CEO of Huntsman Corporation in his interview with India's Economic Times.

Huntsman's view is that the emerging superpowers in the chemical industry such as SABIC and Reliance will start to assert themselves in global markets, with the impacts of large scale, state-of-the-art investments imposing themselves on global supply.

This new and high quality supply will make things very tough for the ageing, smaller scale plants in the US and Europe.

Nothing particularly new in this analysis. We are already seeing new plants coming on stream and further investment in capacity such as Borouge 3 in Abu Dhabi. Investment levels are increasing again, and the only thing constraining further Middle Eastern expansion is the increasing tightness of ethane feedstock availability due to the relatively slow exploitation of the gas fields in the region.

Due to what Peter Huntsman saw as an inability to compete, his company moved out of commodity chemicals and into speciality chemicals. Huntsman's current product portfolio is based on technology and innovation, where these factors are more important than price or raw material availability.

His view is about right, we cannot expect major investments in commodity chemical production in Europe and North America, although we can expect some of the current commodity chemical plants to have a reasonable future if they are innovative, flexible and well maintained. However for innovation in speciality chemicals and green technologies, the future can be positive in Europe and North America, as long as governments and industry take care to maintain the infrastructure and skill base.

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