Brexiter And British Billionaire, Jim Ratcliffe Says Europe's Chemical Industry Is 'finished' And Can't Compete With The US | Old North State Wealth News
Connect with us


Brexiter and British billionaire, Jim Ratcliffe says Europe’s chemical industry is ‘finished’ and can’t compete with the US



The high cost of energy and carbon have left Europe’s petrochemical industry struggling to compete with the rest of the world, according to Jim Ratcliffe, head and founder of industry giant Ineos Group. 

“Europe’s a mess for petrochemicals today,” Ratcliffe said in an interview with Bloomberg TV. “Everybody’s leaving petrochemicals in Europe, which I’ve never seen in my working life before.”

Europe’s soaring energy costs after Russia’s invasion of Ukraine forced swaths of capacity to close, pressured by output from regions where production was cheaper, particularly Asia and the US. Ratcliffe said energy prices in Europe are five times higher than those in North America, making production in the region uneconomic. 

Chemicals are key to the supply of plastics and products that are used in everything from textiles to electronics and construction. As well as being pivotal to industrial growth, the sector accounts for almost 10% of European manufacturing, with about 597 billion euros ($640 billion) of sales before the downturn.

Since 2022, there has been a spate of cuts to chemicals capacity in the region. BASF SE is curbing operations at Germany’s biggest chemicals site. Exxon Mobil Corp. is mothballing its operation at its biggest oil-processing plant in France, while LyondellBasell announced a review of its European operations in May.

Ratcliffe, who is Britain’s second-richest man with a net-worth of more than $15 billion, said Ineos’s own profits have mirrored the shift, with the majority of earnings now coming from the US. Twenty years ago they mostly came from Europe, he said.

Over 70 business and industry leaders, including Ratcliffe, earlier this year called on the European Union to cut energy costs and the regulatory burden of green rules to help the region remain competitive. Parts of the chemicals sector won’t currently be included in the bloc’s carbon border adjustment mechanism when it comes into effect, a scheme designed in part to protect the region’s industry. 

“Energy is really important for an economy at the end of the day,” he said. “Places like America are in a great place for manufacturing because they’ve got cheap energy, they’ve got no carbon taxes.”

Permanent Closures

The comments mirror those from major industry groups, who have warned that Europe’s chemical output has plunged. 

“Production has collapsed massively in the last two years,” a spokesperson for VCI, Germany’s chemicals lobby group said. Production has over the last two years fallen to levels not seen since the global financial crisis and will likely never recover to where it was before Russia’s invasion of Ukraine, they said. 

It’s worth noting that the picture isn’t entirely one-sided.

Ineos is investing in an ethane cracker — one of the types of plant involved in making plastics — in Antwerp that’s set to become operational in mid-2026. Other petrochemical-focused units are also expected to come online in Europe in the next few years, according to Mohamed Chilmeran, research analyst for oils & chemicals at Wood Mackenzie Ltd.

Still, when considering Europe’s overall petrochemical capacity, closures will outpace additions going forward, Chilmeran said.

The crisis is also far from confined to mainland Europe, with the UK also seeing a collapse in its chemicals output. Ineos operates the Grangemouth chemicals plant in Scotland, but Ratcliffe said the nation’s industry has all-but collapsed. 

“There’s not much chemical industry left in the UK,” Ratcliffe said. “It’s finished.”

Subscribe to the Fortune Next to Lead newsletter to get weekly strategies on how to make it to the corner office. Sign up for free before it launches on June 24, 2024.

Read the full article here


Copyright © 2024 ONSWM News. Content posted on the Old North State Wealth News page was developed and produced by a third party news aggregation service. Old North State Wealth Management is not affiliated with the news aggregation service. The information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date the articles were published. The information presented is not an offer to buy or sell, or a solicitation of any offer to buy or sell, any of the securities discussed.