CHEMICALS

The Future of the
European Chemical
Industry
K P M G I NT E R N AT I O N A L

About KPMG’s
Global Chemicals Practice
Through its member firms, KPMG has
invested extensively in developing a highly
experienced chemicals team.
KPMG’s understanding of the industry comes from KPMG member firms’ global
experience, knowledge sharing, industry training and the use of professionals
with chemical industry experience as well as participation in a variety of industry
forums.
KPMG member firms work with many of the chemical industry market leaders,
using their industry experience to understand the business priorities as well as
the strategic challenges faced by these organizations.
Our presence in many international markets enables our firms’ professionals to
assist clients in recognizing and making the most of opportunities as well as
advising on the implementation of the changes dictated by industry
developments.

Executive summary
The European chemical industry is facing the dawn of a new reality. While the industry worldwide is still reeling from the
current cyclical downturn and the recent global recession, chemical companies in Europe are faced with the ongoing rise
of new competition in the Middle East and Asia (especially from China and India). These factors appear to be driving an
inexorable shift eastward in the global chemical industry, particularly at the bulk / commodity end of the sector.
Indeed, our research suggests that new global capacity being developed in the coming years will render 14 of 43 crackers
in Europe uneconomic by 2015. The closure of these plants would correspond to the loss of 26 percent of total cracker
capacity in Europe.
At the same time, Middle Eastern chemical producers continue to seek expansion along the value chain into higher valueadd solutions. Their Chinese counterparts are attempting to fulfill a government directive to make the country self-sufficient
in chemicals. These Middle Eastern and Chinese entities are often cash-rich and backed by government support. A rapid
path to achieving these goals appears to be offered by acquisition of technology and intellectual property from a European
chemical industry seemingly beset by structural problems.
However, KPMG believes that the death knell of the European chemical industry has been sounded prematurely. This
remains an industry that employs over 1.2 million people and contributed in 2007 to a European Union (EU) trade surplus
in chemicals of EUR35.4 billion.1 There is no doubt that the shape of the global chemical industry is changing, but the
industry in Europe can continue to play a significant role in this new reality if it can:
• Make hard choices now to rationalize unprofitable facilities that might not be able to compete with newer, more
efficient plants being built outside of Europe
• Ruthlessly identify which chemical clusters will remain competitive on the global stage and focus resources and
investment in these areas to ensure their long-term survival
• Capitalize on its historic advantage in innovation to stay ahead of the competition, especially in terms of sustainable
solutions which will be increasingly in demand
• Leverage its long-standing customer relationships to develop more specialized, higher-performance solutions
• Actively seek beneficial joint ventures and strategic alliances that provide access to both cheap Middle Eastern
feedstocks and growing Asian markets

Many European companies are already recognizing the possible advantages — and the necessity — of repositioning
themselves as solutions providers rather than just basic suppliers for their customers. This can include finding new ways to
work with companies that have traditionally been perceived as major competitors. The companies that successfully achieve
this transition should be better positioned to meet the global competitive challenges of the 21st century.

The European chemical

industry must capitalise on
its historic advantage in
innovation to stay ahead of
the competition.

1

“High Level Group on the Competitiveness of the European Chemicals Industry, Final Report,” European Commission, July 2009

Chris Stirling
Head of Chemicals,
KPMG in Europe

2   T H E FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY .

3.2. A global shift 12 2.T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  3 Contents 1. Challenges from the East 12 2.3. Case study – Going green with Cognis – a flexible strategy 30 5. Middle East 17 2.2. Case study – BASF – verbund manufacturing 32 . Impact of the current downturn 8 2.1. China 21 3. Innovation: the key to survival 24 3. Evolving from commodities to specialties 25 3.1.2.1. Current state of the industry in Europe 4 1. Developing joint venture relationships 28 4. Strengthening customer relationships 28 3.4. Industry overview 4 1. Maintaining a technological advantage 26 3.

Long a powerhouse in the global economy. the industry now faces the need to make difficult choices about its future development and role in the face of increased competition from overseas. 1.257 billion*** The EU accounts for 29. the recent economic downturn presents both risks and opportunities for businesses. however.4   T H E FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY 1 Current state of the industry in Europe As with any crisis. Properly developed and managed.1 Industry overview Geographic breakdown of world chemicals shipments 2008 900 375 850 800 750 736 650 600 550 500 400 350 300 250 204 304 EU 27 = 537 450 ASIA = 883 Chemicals shipments (€ billion) 700 529 200 157 150 113 100 50 109 0 Asia China EU 27 NAFTA Latin America Rest of Europe** Other* EU Japan Rest of Asia Other* = Oceania and Africa Rest of Europe** = Switzerland. We also feel. This is especially true for the European chemical industry. 2009 World chemicals shipments in 2008 were €2. KPMG member firms believe that today’s risks need to be clearly assessed. technology and business relationships. World chemical shipments*** = ACC uses as a proxy for sales Source: American Chemistry Council. Norway and other Central & Eastern Europe. especially in the light of continued economic uncertainty. that companies can respond with innovative solutions in terms of market focus.1% of the total . these innovations can help companies to not only adapt and survive but even thrive in the 21st century.

3% HU 0.8% . Belgium and Iceland PL 2.3% Others 2.T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  5 EU chemical industry sales by country Percentage share of European chemical sales NL 10.0% Consumer chemicals 10.3% RO 0. Netherlands.0% 4.5% IE FR 14.3% 5.7% AT 1.2% CZ 0. Italy.3% Big 8 = Germany.8% Pharmaceuticals 27.4% Source: Cefic Chemdata International and Eurostat Specialty chemicals 17.6% FI 1. United Kingdom. France.7% Other DE 25.9% Source: Cefic Chemdata International Sector-wise breakdown of EU chemical industry sales Soaps & detergents Perfumes & cosmetics Pharmaceuticals Petrochemicals Other specialty chemical Plastics & synthetic rubber Paints & inks Man-made fibres Other basic inorganics Industrial gases Fertilisers Crop protection Base chemicals 44.7% SE 1.7% ES UK 10.2% 6.8% BE IT 11.7% PT 0. Spain.5% 11.

mechanical and electrical industries. perfumes and cosmetics. plastics. in particular to markets in North American Free Trade Agreement (NAFTA). • Consumer chemicals that are sold to end users and consumers in the form of soaps. Recent industry growth has been driven mainly by regional sales. Ibid. Over 1. Produced in large volumes. coatings.4 percent for construction • 6. From 1997 to 2007. 12 of the 30 leading chemical companies in the world were headquartered in Europe. “” We see a sustainable future for chemical companies in Europe based on specialties and better strategies to support the success of the customer.” Cefic Ibid.6   T H E FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY The European chemical industry drives a significant part of the economy across the EU.4 percent for services • 6.3 This growth has been supported by the removal of trade and nontrade barriers among the EU countries and by the size of the internal market — almost 500 million consumers across Europe. crop protection. The remaining areas of chemical consumption can be divided into the following: • 30. Large industrial customers represent 25. government and non-profit organizations • 16. The European chemical industry is based on the following four categories of products: • Base chemicals that include petrochemicals. detergents.4 2 3 4 “Facts and Figures: The European chemical industry in a worldwide perspective: 2009. sales more than doubled among EU partner countries. their derivatives and basic inorganics.3 percent for other industries2 Over the years. This category includes metals. representing 10 percent of world chemical sales. . • Specialty chemicals that are for specialized use and produced in lower volumes than base chemicals. neighboring countries (especially Turkey and Russia) and Asia. Examples include ingredients used in adhesives. dyes and pigments etc.2 million workers are employed in the industry. the automotive industry and paper and printing products. supporting research and providing supplies in many regions of the EU. paints and inks.3 percent for end users in private households.4 percent for agriculture • 5. they are sold as commodities to manufacturers in the chemical industry or to other industries. additives. In 2008. the European chemical industry has shown considerable resilience. textiles and clothing.1 percent for manufacturing not listed above • 10. 23 percent of European chemical sales were for customers outside of the EU. In 2007. strength and adaptability. • Pharmaceuticals including both basic pharmaceutical products and pharmaceutical preparations.1 percent of chemical consumption in the EU. manufacturing products.

T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  7 .

July 2008 — August 2009 4.5 -6. the European chemical industry has felt an enormous impact from the recent global recession.00% August July June May April March February January December November October September July August -14.5 -4.4 -20 -19.” Chemical Week.00% -2.00% % change on year earlier 0.” adding that.9 -3.2 Impact of the current downturn European chemical industry output.0 5.8 -4.3 4.5 5 5.3 -10.00% 2.“ a double whammy is coming at us [as] we now face a supply-lead problem caused by the new Middle East capacity.00% -12.00% -4.5 -10 -9.6 -6.0 0 -5 -1. the industry saw a monthly year-on-year decline of 13. Global V.6 -15 -5.00% -8. Graham van’t Hoff.P. At its lowest point in March 2009.5 Describing the industry downturn.”6 5 6 CIA Matters.1 Basic Inorganics 2010 Source: Cefic Economic Outlook Task Force (November 2009) Like virtually every other industry worldwide. a figure that if annualized would represent an output decline of approximately EUR56 billion.2 percent.7 2.00% -10.7 -25 Consumer Chemicals 2008 2009 Specialty Chemicals Petrochemicals Chemicals Polymers -20.00% -6.8   T H E FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY 1.6 -12.6 5. July 2009 “Can the European petrochemical industry compete against emerging producers based in the Middle East?. 2009 .00% Source: CIA Matters EU chemicals production: sector outlook Production (volume): growth rate (yoy) 15 10 6. “There was a complete meltdown of demand in the fourth quarter of 2008. September 21. Base Chemicals at Shell said.

with some companies (particularly in the base chemicals.8 7 8 “Reaction: KPMG’s views on the economic outlook for the chemical industry. prompting banks to carefully re-evaluate the entire industry. This fall in demand led to a severe destocking by many companies. Many large companies are finding major credit lines both difficult and expensive to obtain. the bond markets in Europe are currently relatively healthy. providing access to financing for those companies that retain an investment-grade credit rating. paint and man-made fibers. especially in key markets such as automotive and construction. .” webcast conducted by Chris Stirling. KPMG “” Large companies are finding major credit lines both difficult and expensive to obtain.T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  9 In Europe. Small and medium enterprises (SMEs) are experiencing even greater difficulties in obtaining guarantees and letters of credit for imports and exports. polymers and specialty chemicals sectors) watching their own output decline by 30 to 60 percent.7 Tight credit continues to hold back recovery.” September 2009 “Weathering the Storm: the Chemical & Pharmaceutical Sector. The credit ratings for a number of chemical companies have been downgraded. the chemical industry saw massive reductions in demand for plastics. However.

” Chemical Week. the European petrochemical industry and its markets may continue to contract.12 Even with recovery. Parts of the automotive industry have moved to Eastern Europe. for example. and these have included downsizing and massive restructurings. European Chemical Industry Council expects a five percent increase in output growth in 2010 compared to 2009.10 In the meantime. 11 March 2009 “Clariant To Cut 570 Jobs. the industry recognizes that hard decisions need to be made. suggesting that a significant global recovery should not be expected before 2011.220 positions in 2009 (equivalent to 17 percent of its global workforce). with demand not returning to 2007 levels until probably 2012 or even later.17 November 2009 “INSIGHT: Gathering signs of recovery for chems. The textile industry has offshored to the Middle East and Asia to be closer to high-growth markets and benefit from lower manufacturing and logistics costs. Cefic. writing on behalf of the European Chemical Marketing and Strategy Association (ECMSA). also offers guarded optimism.9 Henrik Meinke.1 0   T HE FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY Many analysts and industry observers predict a gradual though modest recovery. 9 “EU chemical industry expected to follow a modest and fragile recovery in 2010. Cefic. which to date have resulted in the redundancy of approximately four percent of the prerecession chemical industry workforce in Europe.” press release.11 Akzo Nobel has announced plans to cut 20 percent of the workforce at its Amsterdam head office and Arnhem shared service centre. economy begins to stabilize. 2 November 2009 10 11 . although industry conditions should improve in 2010. sought to shrink its workforce by a total of 3. 30 November 2009 12 “Results fall on weak demand.” ICIS. followed by their tier 1 and tier 2 suppliers to improve their competitiveness.” Chemical & Engineering News. Many end-user industries have started to move operations outside of Europe. Clariant.

corresponding to 65 percent of total European capacity. likely to be small. Certainly recently. Korea and the US. According to recent estimates.” Chemical Week. However. as a result. 10 out of 17 European ethylene glycol plants may become uneconomic. non-integrated units). and approximately 14 out of these 40 will be in Europe. land-bound. there is a sentiment within the industry that the US will be more ruthless in restructuring uneconomic plant as the industry there is less encumbered by political issues which can make restructuring difficult in Europe. 40 out of 200 crackers worldwide are likely to become uneconomic by 2015.220 positions in 2009.4 percent on imports of adipic acid from the EU. 30 November 2009 “China Dumping Duties. can expect to be profitable in most market conditions. Similarly. China. older plant in Europe is likely to become uneconomic. Global ethylene capacity and demand 180 170 (million tonnes) 160 150 140 130 120 110 100 90 80 2007 Global capacity 2008 2009 2010 2011 2012 2013 Global demand Source: Bank of America Securities/Merrill Lynch KPMG analysis shows that European petrochemical capacity may decline dramatically in the coming years. Whilst new plants are typically in the lowest-cost position on the global cost curve and. . there is a real danger that individual countries or regions could resort to protectionist measures which is likely to harm the industry and hamper growth. there should be a process to identify and rationalize chemical plant and clusters made uneconomic by the new world order (principally.13 China has also imposed definitive anti-dumping duties of between 5. Rather. The challenge for the European chemical industry is to resist the urge to hide behind protectionist barriers. section 5).T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  1 1 A key issue is how the European chemical industry and European governments seek to respond to these changing dynamics.9 percent and 35. 16 November 2009 KPMG research and analysis “” Clariant sought to shrink its workforce by a total of 3. the EU and India recently initiated anti-dumping measures against the Middle East. This should allow future investment to focus on those areas in which the European chemical industry remains competitive on the global stage (see verbund manufacturing. The closure of these plants would correspond to the loss of 26 percent of total cracker capacity in the EU.14 With the scale of capacity expansion under way in the Middle East and Asia likely to result in significant overcapacity in the industry in the medium term.15 US chemical producers are likely to be similarly impacted. there has been a trend toward protectionism in the industry.” Chemical Week. 13 14 15 “Antidumping Cases Target Mideast Petchem Exports.

a. India. the relative importance of these regions can be best understood as part of a larger transition in economic strength from developed to emerging markets.3% 135 125 115 105 95 1997 1998 EU 1999 2000 NAFTA 2001 2002 Asia Pacific* 2003 2004 2005 Latin America *Asia Pacific includes Japan.2% 1. 2.1 2   T HE FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY 2 Challenge from the East As European chemical companies recover from the recession. Taiwan.1 A global shift International comparison of chemical production growth 175 Production index (1997 = 100) 165 155 145 1997 – 2007 Average growth p. Although most of this competition will come from the Middle East and China. Philippines. Thailand. they will face even greater challenges from increased competition overseas. Pakistan. Korea.4% 1. Malaysia. China. Bangladesh and Austraila Source: Cefic Chemdata International 2006 2007 .7% 3. Asia Pacific* Latin America NAFTA EU (1997-2007) 5. Singapore.

2008 $2.5 – 5.400 billion 10% 11% Rest of world South America 6% 6% South America Western Europe 25% 19% Western Europe North America 21% 18% North America Asia Pacific 38% 46% Asia Pacific Rest of world €650 billion + 4. 2008 World natural gas costs $1.75 Middle East .75 Canada $0.00 Indonesia $5.700 billion 2020 EUR2.75 US $7.60 Ukraine $2. June.50 Trinidad $0. €1.150 billion Source: BASF.T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  1 3 Chemical demand (excluding pharma) 2008 EUR1.80 Venezuela $1.25 Russia $0.50 Argentina $6.0% p.75 North Africa $3.a.60 West Europe Source: JP Morgan’s Chemical primer.

Northeast Asia Southeast Asia Others Source: Jadwa Investments. December 2009 2011f 2012f .1 4   T HE FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY Global ethylene trade 25 20 Net exports 15 (million tonnes) 10 5 0 -5 -10 -15 Net imports -20 -25 2002 2003 2004 2005 2006 2007 2008 2009f 2010f North America South America West Europe Middle East India Sub. GPCA Annual Forum.

Source: Chemical Week DuPont US Total France Startup .a.940 Source: Platts. Ineos UK 6. Royal Dutch Shell UK/Netherlands 5. Exxon Mobil US 3. Dow Chemical US 4. SABIC Saudi Arabia 7. 2008 Rank 1. Lyondell Basell US/Netherlands 8. 10. December 2009 Top 10 chemical producers (sales value). GPCA Petrochemical Report.) Company Location Grade Saudi Kayan Saudi Arabia HDPE 400 Q1 2011 Saudi Kayan Saudi Arabia LLDPE 400 Q1 2011 Qatofin Qatar LLDPE 450 End 2010 Borouge 2 UAE HDPE 540 Mid 2010 Borouge 2 UAE LLDPE 650 Mid 2010 Ilam PC Iran HDPE 300 2010 Kermanshah Iran HDPE 300 2010 Lorestan Iran HDPE 300 2010 Kordestan Iran LDPE 300 2011 Mahabad Iran HDPE 300 2011 Sinopec Tianjin China HDPE 300 Online 2009 Sinopec Tianjin China LLDPE 300 Online 2009 Sinopec Zhenhai China LLDPE 450 Q2 2010 Baotou Shenhua China PE 300 May 2010 PTT Chemical Thailand LLDPE 400 Online 2009 PTT Chemical Thailand HDPE 300 Online 2009 Siam Cement Thailand HDPE 400 Mar 2010 Siam Cement Thailand LLDPE 350 Mar 2010 Haldia PC India PE 670 Jan 2010 GAIL India HDPE 200 Apr 2010 GAIL India HDPE 200 Apr 2010 GAIL India HDPE 200 Apr 2010 Indian Oil Corp India HDPE 350 2012 Indian Oil Corp India HDPE 300 2012 BPCL India HDPE 220 After 2010 ONGC India HDPE 360 Dec 2012 ONGC India HDPE 360 Dec 2012 ONGC India HDPE 340 Dec 2012 Total 9. October 2009 – 12 Capacity ('000 m. Sinopec China 9./p.t. Company Country BASF Germany 2.T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  1 5 New polyethylene plants planned for start-up.

4 of the top 10 chemical producers were located in Europe.19 Several factors can be cited to explain this shift in market leadership. Reliance India 4.” Cefic 19 BASF. Sinochem China 7. For example. Sinopec China 6. it should be noted that chemical producers on the US Gulf coast have an advantage over Europe since they are primarily fed by lower-cost ethane rather than the more expensive heavy feeds that supply Europe. strong demand in Asian markets supports growth in production for domestic chemical companies in that region. the European chemical industry saw a gradual but steady decline in global market dominance. over 95 percent of that growth was concentrated in developing countries. and this cost difference will almost certainly continue in the future. Dupont US ADNOC / IPIC Abu Dhabi Source: KPMG in the UK. In addition. but the portion of global EU sales declined by 2. BASF Germany 3. 95 percent of world chemical production growth was in developing countries. • Between 1995 and 2005. Dow Chemical US 8. weakening consumer demand for end products in Europe has led to significant underutilization of capacity. 10.7 percent. only 1 of the top 10 producers is likely to be still in Europe while six are likely to be based in the Middle East or Asia. most analysts and industry observers agree that the global chemical industry will continue in its steady shift to the East.” European Commission. 2008 17 . In particular. Company Country SABIC Saudi Arabia 2. Saudi Aramco Saudi Arabia 9. with a greater portion of chemical majors headquartered outside the EU in the future. the cost of raw material feedstock is significantly higher in Western Europe than in most other regions of the world. but KPMG suggests that by 2015. As a result. plant shutdowns and margin erosions. December 2009 Even before the current recession.1 6   T HE FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY Top 10 chemical producers. 16 “This assumes that the rate of growth in petrochemical companies continues at the current rate until 2015.17 “” Between 1995 and 2005. This shift can be measured by a number of metrics. Exxon Mobil US 5. In 2008. However.18 • BASF estimates that global chemical demand from 2008 to 2020 will increase eight percent in the Asia-Pacific region but decrease six percent in Western Europe.” “The state of the European Chemicals Industry – a thoughtstarter for the High Level Group on the competitiveness of the European Chemicals Industry. global chemicals sales increased by 60 percent. Meanwhile. 2007 18 “Facts and Figures: The European chemical industry in a worldwide perspective: 2009. world chemical production increased by almost 40 percent. • From 1997 to 2007. 2015?16 Rank 1.

integrated European chemical giants (which began with the break up of the likes of Hoechst and ICI).(JUPC) Shaybah Mazalij Manjoura Shaden Waqr Tinat Niban gas fields North & South Kidan gas fields Oman Saudi Kayan Petrochemical Co Arabian Petrochemical Co Yemen Ras Tanura Integrated Petrochemical Co Major seaports Plants operating Plants under study/planned/construction/delayed Source: BP statistical review the world energy 2007 and ICIS plant research as of October 2008.(Sharq) Farsa Chemical Co Al Jubail East West NGL Line East West Petroline Jubail United Petrochemical Co .5 7.8 9.4 25% 20% 15% 10% 5.(Arvand) Iran To Lebanon Iraq Ca. September 2009 BASF Dow Chemical ExxonMobil ChemaWEyaat Shaybah oil field Iraq Pipeline Across Saudi Arabia Jeddah 5% Morvarid Petrochemical Co DuPont Formosa Plastics Duqm Refining & Petrochemical Complex .(DRPC) .2 4.8 90 0 SABIC Source: Samba. Updated by KPMG International. The opportunity for European chemical producers is to focus their remaining activities on emerging mega-trends and to retain a level of flexibility that enables them to rapidly adapt as these trends change.T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  1 7 This will mark the conclusion of the process to break up the majority of the historic. with their 21st century equivalents being created in the Middle East and Asia.(Petro-Rabigh) Safaniya oil field Zuluf oil field Riyadh Ras Tanura PS3 ExxonMobil Chemical/ Qatar Petroleum Qatar Ghawar oil field UAE Riyadh Yanbu Muajjiz Rabigh Eastern Petrochemical Co . 2. 60% of Saudi Arabia’s natural gas reserves consist of associated gas mainly from Ghawar Shaybah and Zuluf fields Zubair Kuwait Qaisumah Yanbu National Petrochemical Co .(ARPC) Equate Petrochemical Co Marun Petrochemical Co Gachsaran Petrochemical .(TKOC) Arak Petrochemical Co .2 Middle East Middle East – Major ethylene oxide producers The Kuwait Olefins Co .7 3. 2008 30% 28. 2009 Operating margins.(YanSab) Saudi Arabia Rabigh Refining and Petrochemical Co .

” .“ 1 8   T HE FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY The availability of these resources provides the chemical industry in the Middle East with both energy and feedstock at relatively low prices.

” Chemical Week.75 for one million British Thermal Units (BTU) of natural gas compared to the average market price of between US$7 – 8 in Western countries. Companies like Saudi Basic Industries Corporation (SABIC) pay only US$0. based mainly on ready access to cheap feedstocks. 21 September 2009 21 . the largest such reserves found anywhere.T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  1 9 Middle East ethylene capacity 40 25 35 20 25 15 20 10 15 (percent) (million tonnes) 30 10 5 5 0 0 2007 2008 2009 2010 2011 2012 2013 Capacity Capacity as a percent of global capacity Source: Bank of America Securities/Merrill Lynch.21 Whilst the government-backed oil producers in Saudi Arabia have announced plans to increase the cost of natural gas to petrochemical producers from 2012 (initial estimates suggest US$1. 20 American Chemistry Council.25/m BTU) there will only be a marginal erosion of this massive cost advantage.20 Some analysts estimate that ethane-based Middle East producers have a cost advantage of up to US$350/mt over some of their naphtha-based competitors in Europe. 2009 Major Middle East sovereign wealth funds Country Funds Assets under management (US$ billion) UAE Abu Dhabi Investment Authority 875 Saudi Arabia Various 300 Kuwait Kuwait Investment Authority 250 Libya Reserve Fund 50 Qatar Qatar Investment Authority 40 Iran Foreign Exchange Reserve Fund 15 Source: ‘CIA the Word Factbook’. The availability of these resources provides the chemical industry in the Middle East with both energy and feedstock at relatively low prices. The Middle East region has about 67 percent of the world’s oil reserves and 45 percent of all natural gas reserves. October 2008 “Can the European Petrochemical Industry Compete Against Emerging Producers Based in the Middle East?. 2009 The Middle East has emerged as a major competitor for the European chemical industry. proximity to growing markets in Asia and support by governments and local authorities.

more than twice the global rate.2 0   T HE FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY HDPE delivered costs to SE Asia 1200 1000 800 600 400 200 0. “stay ahead of demand for natural gas [for] chemical feedstock. 23 November 2009 GPCA 2009: Mideast Influence Continues to Grow. to 8. Chemical Week.24 Nevertheless. allowing it to.26 22 GPCA Annual Forum. will increase by 5 trillion SCF in 2010. Korea NWE Raw Materials Source: ChemSystems.” Chemical Week.5 percent per year. integrated complexes).25 Forecasts until the year 2020 predict that the region will continue to grow at an average of over 9.23 Some development projects have been delayed by financing constraints. raising its share of the global total from 28 percent to 32 percent over the five-year period. and polypropylene (PP). Middle Eastern countries are making huge investments to increase capacity in both upstream and downstream production facilities (principally in the form of world-scale. Whilst reports have suggested that additional ethane allocations were likely to be limited. China. His Excellency Ali Al-Naimi.8 million mt/year in 2014. which stood at 263 trillion standard cubic feet (SCF) at the end of 2008.2 million mt/ year in 2009. including ethylene glycol (EG).0 ME USGC Freight to SEA Fixed Costs Overhead Utilities S.8 billion SCF a day now to 13 billion SCF a day in 2020. 7 November 2009 25 Ibid. July 2008 23 24 . Minister of Petroleum and Natural Resources. The global downturn has led to questions about the ability of worldwide markets to absorb capacity from the Middle East and other regions. Kingdom of Saudi Arabia recently announce that Saudi Arabia’s proven gas reserves. according to SRI Consulting in a recent analysis. 2009 Of more concern to Middle Eastern producers is continued access to cheap ethane allocations as alternative LPG and naphtha feeds have a significantly lower cost advantage. 26 “World chemicals market: Asia gaining ground. polyethylene (PE). 9 December 2009 Quoted in “Reinforcing Leadership in Petrochemicals.”22 Backed by a dependable supply of resources as well as significant cash reserves. More than 19 million mt/year of ethylene capacity will come onstream in the Mideast by 2015.” Deutsche Bank Research. EG capacity will increase in the region from 6. The Kingdom’s gas production is expected to increase from 8. the region is still expected to become a leading producer for a range of petrochemicals and plastics. the EU and India have each begun antidumping procedures this year against petrochemical exports from the Mideast.

23 November 2009 Analysis by KPMG International 2008 2004 Output 2005 2006 2007 . recent transactions such as SABIC’s acquisition of GE plastics and the acquisition of Nova Chemicals Corp.28 ­—Tom Crotty CEO of Ineos Olefins and Polymers Europe The same cost advantages that help chemical companies in the Middle East to enter European markets will also help to increase their success in Asia.“” T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  2 1 Whilst a recent survey suggests that 85 percent of product that is sold from plant currently being built will specifically target China. trade flow patterns have changed dramatically. However. and Europe is expected to become a net importer of polyolefins by 2010.” 2009 27 28 Quoted in “Reinforcing Leadership in Petrochemicals. the rest of Asia and the Middle East itself. “whatever is left over will have to find a home and the next obvious place is Europe. Although more port facilities. Ten years ago. 2.chemhello. and the Middle East is now the dominant inter-regional exporter of polyolefins.” Chemical Week. In addition. Cited in “Chemicals in China: Responding to new challenges. CEO of Ineos Olefins and Polymers Europe said.3 China 10 9 8 (million tonnes) 7 6 5 4 3 2 1 0 1997 1998 Dependency to foreign countries 1999 2000 2001 Growth of demand 2002 2003 Consumption Source: www.” adding that. Older European commodity-based plants will likely be less competitive in the years ahead. North America was the primary exporter and supplier of products such as PE and PP to the world. “some of the new capacity will wash back into Europe but the unknown is how much. tankers and pipelines need to be developed. indicate a long-term strategy by major players in the Middle East to expand globally into downstream areas. This explosive growth and expansion in the Middle East has helped to drive significant changes in the European commodity chemicals market. it is still cheaper to transport raw materials and products from the Middle East to Asia than from Europe. Many European customers have already turned to the Middle East for supplies of raw materials such as PE. gain new customers and even displace European companies from markets where they have traditionally dominated.com. This geographical advantage will enable the Middle East to further expand into Asian markets. Tom Crotty. by International Petroleum Investment Co.”27 Whatever is left over will have to find a home and the next obvious place is Europe. Europe was well balanced between supply and demand.

(CMAI). the Chinese chemical industry continues to grow in strength.6 percent in December of 2008. but questions remain whether the stimulus will have long-lasting benefits.528 1500 1. Republic Taiwan India Mexico China 0 2.9 3. 6.6 7. 24 February 2009 “World chemicals market: Asia gaining ground” 30 31 .3 World sales growth 4.8 5. 2009 The current economic downturn has reduced industry growth in China and limited further capital investment over the short and medium term.” www.9 Canada Africa EU-27 Switzerland Russia Brazil Korea.18 February 2009 “Global chemicals output could fall 6% in ‘09” Oxford Economic Forecasting (Source ICIS news).6 7.4 2. consumption of finished oil products (a key indicator of their chemical industry) dropped 8. chemicals output from China in 2009 may grow by over four percent. 2008 China Foreign Exchange reserves (US$billion) 2500 1. resins and fibers is now approximately 80 percent.30 Part of this growth can be attributed to China’s massive stimulus programs.org.1 0. By 2015. China has. in fact. China is expected to overtake the US as the largest chemical producer in the world. but significant additional capacity will be required to 29 “China’s petrochemical industry reverses 10-y high growth.2 2   T HE FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY Chemicals sales growth rates of selected countries and regions 1997–2007 15 16. Nevertheless.4 3.a.chinamining. According to the China Petroleum and Chemical Industry Association.7 5 7.946 US $ billion 2000 1.8% p.29 Despite the recession.31 Self-sufficiency for the industry is an expressly stated policy of the government.1 Japan 4.066 1000 819 610 500 166 212 2000 2001 286 403 0 2002 2003 2004 2005 2006 2007 2008 Source: China State Administration of Foreign Exchange.0 USA Average annual sales growth rate (%) 20 Source: Cefic Chemdata International.5 10 8. been close to self-sufficient in base chemicals since the 1980s. The country’s self-sufficiency index for basic chemicals. according to estimates from Chemical Market Associates Inc.

The company. much of it in specialties. this is likely to focus on distressed Western assets which provide access to the technologies they require to reach their development goals. almost all major multinational chemical companies established a presence in China. BASF is reconsidering the opening of a major methylene diphenyl isocyanate (MDI) chemical plant in southwestern China. In the first instance.5 billion worth of chemicals in 2008.9 billion in the Nanjing venture. 32 33 “Chemicals in China: Responding to New Challenges. attracted by a low-cost base and expanding markets. The plants operate through a local entity but are overseen by Clariant for all management.32 China also imported more than US$84. Other European chemical companies will also continue to develop their partnerships and market presence in China. or plastic dye pellets. However. The two companies have invested US$2. We believe that we will increasingly see Chinese chemical majors as bidders in M&A auction processes as their focus turns from attracting inbound Western investment to establishing themselves on the global stage through outbound acquisitions. The company now has numerous plants in other provinces as well. is moving ahead with plans for a major petrochemical complex in Nanjing with Sinopec. Accordingly.33 To meet their growing demand for specialties. As in the Middle East. and the country currently lacks sufficient domestic manufacturing capabilities to completely satisfy domestic demand. Clariant opened its first plant in Guangzhou in 1995.T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  2 3 satisfy the expected growth in demand in the coming years. China is constructing its own chemical plants and has been using joint ventures with European players to increase capacity. Chinese companies face critical challenges in terms of poor logistics. thus removing the credit barrier faced by companies in the West. the industry will continue to need access to Western technologies and resources. the financial crisis has caused many international chemical firms to reassess much of their investment plans and cut staff worldwide. At the same time. particularly at the specialty end of the chemicals value chain. For example. Fully-owned or joint venture operations with full trading licenses have been established. tight raw material supply and the lack of experienced management. making masterbatches. because of weakened global demand. the Chinese chemical majors have ready access to massive funding through their government. The plant was scheduled to begin production in 2010. 3 April 2009 . however.” KPMG 2009 Emerging Markets Information Service. governance and investment issues. Before the economic downturn.

2 -6.3 Share of Country (%) 30 25 20.7 -11.4 3.7 15 10.8 Sweden 0 5.8 1.6 2.8 0 United States of America Japan Germany Republic of Korea China France United Kingdom Netherlands Switzerland Sweden Italy Canada Jan.0 20 17.6 4.4 4. – Aug. January 2008 – August 2009 35 32.1 3.4 2.2 4   T HE FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY 3 Innovation – a key to survival Share of country in total PCT filings. August 2008 – August 2009 Note : 2009 data are provisional and incomplete.5 1.5 29.4 15 10.9 10 -4. Counts are based on the international filling date and the country of residence of the first name applicant.3 2.7 1.7 Switzerland 5 -5 -10 Netherlands United Kingdom France Republic of Korea Germany Japan China Total PCT Fillings Growth Rate(-2.8 4.9 -7.7%) -15 United States of America Annualized Growth Rate based tender Line Annualized growth rate of PCT Filings. 2009 Source: WIPO Statistics Database. 2009 .9 10 11.6 Canada -4. – Aug.6 1.9 2.3 2.9 5 4.3 -0.5 4.5 2.6 3.4 2. The growth rate is the annualized growth rate between August 2008 and August 2009.3 Italy -2. 2009 20 15. Source: WIPO Statistics Database.6 -4. 2008 Jan.

as well as for emissionabatement products such as insulation materials for residential and industrial buildings. acquisitions.T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  2 5 We believe that a key to survival for European chemical companies is based on innovation at three different levels — moving from bulk chemical production to the specialty end of the value chain. In terms of “pull.” European companies are attracted both by strong specialty markets and the fact that value-added. this move to specialties is a matter of both “push” and “pull. value add services and other strategic initiatives.34 In many ways.” As noted above. European companies are being pushed out of commodities because of the cheap feedstocks available to producers in the Middle East. This has led to a significant loss in competitive advantage.1 Evolving from commodities to specialties In its final report in February 2009. world-scale crackers being built in Asia and the Middle East reach a capacity of more than 1. leveraging their traditional advantage in technology and establishing closer customer and competitor relationships through joint development agreements.000. specialty manufacturing requires a high level of technical capability found more often in the EU than in developing countries. the last 15 to 20 years have seen relatively little investment in the EU in the basic chemical sub-sectors.000 tons/year. 3. In addition. the last cracker was built in the early 1990s. European companies that continue focusing on commodities will have to make massive investment simply to survive. 34 “Final Report of the High Level Group on the Competitiveness of the European chemicals industry” . Because of this. The average cracker size in the EU is currently about 450. the European Commission’s High Level Group (HLG) on the Competitiveness of the European Chemicals Industry recognized that abandoning petchems and focusing on specialty chemicals is a clear necessity. the European petrochemical industry is a natural choice for complex specialties for biotechnology and nanotechnology.000 tons/year while the new.

2 6   T HE FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY Obviously. in total patent applications. these companies are uniquely positioned as leaders in the development of new energy-efficient products. with a more centralized and coordinated approach. To protect their technological advantage. rising costs and other business pressures. China and other areas. 23 February 2009 “Final Report of the High Level Group on the Competitiveness of the European chemicals industry” 36 . specialty chemicals remains a highly attractive global market worth more than US$680 billion.328 patent applications in 2008. The European Commission supports the development of a more coherent IPR policy. 35 “Firms get upper hand in application process. EU countries also enjoy a leadership position in patented technology.4 percent. vegetable oils and plant extracts. China is now the third largest patent application jurisdiction in the world and may soon overtake the U. intellectual property should be protected by appropriate and cost-effective rules regarding intellectual property rights (IPR).35 However. including the rate of patent filings and the number of patents in force. efficient manufacturing processes and alternative feedstocks based on natural materials such as sugar. a year-on-year increase of 19.2 Maintaining a technological advantage The overall technological advantage of one region over another can be estimated in various ways. this move up the value chain by European companies will require strategic investment in the face of tight credit. Despite these challenges. The State Intellectual Property Office (SIPO) received a total of 828. in particular for SMEs. In addition. even though this strategy will become more challenging as commodity production increases in the Middle East. (See “Going green with Cognis – a flexible strategy. China accounted for only 4.” China Business Weekly. Established European companies have the resources and experience in this market to help them compete as major players worldwide.6 percent of PCT filings. European companies should review their R&D plans and extend corporate research programs to medium and long term objectives. The public sector should also provide effective support for these efforts. European companies also need to maintain sources for commodity chemicals through clustering of crackers with downstream manufacturing. Using their technological advantage to stay ahead of the market.36 This includes a common jurisdictional framework and greater alignment of international patent law through the World Intellectual Property Organization (WIPO) and initiatives such as the Transatlantic Economic Council (TEC). accounting for 28 percent of Patent Cooperation Treaty (PTC) filings from January 2008 to August 2009.S. Sustainable development is another opportunity for innovation by European chemical companies. During the same period.” section 4). 3.

the EU has one of the most well developed and successful educational systems in the world. 37 Source: Eurostat “The state of the European Chemicals Industry – a thoughtstarter for the High Level Group on the competitiveness of the European Chemicals Industry.39 European companies recognize the consequences if these trends continue. Highly qualified human resources are vital to European chemical companies: an average of 32 percent of their employees have attained third-level education as compared to an average of 26 percent for other industries. the last decade has seen a serious drop in the number of European students taking chemistry at the third level. 2007 39 Higher Education Statistics Agency Limited 2009 38 . There is a clear opportunity for the chemical industry in Europe to capitalize on its historical technological advantage and provide global leadership in the realm of sustainable development. Chemical companies should take the opportunity to join with governments and private organizations to encourage more students to enter fields that support the chemical industry. surveys have shown a dramatic rise in the number of chemistry and engineering graduates in Asia.37 However.38 During the same period. another metric is especially important — the number of graduates in chemical engineering and related fields. Chemistry currently scores last among the most preferred subjects studied at secondary school.” European Commission. For the chemical industry. the green agenda is increasingly being driven by the chemical industry’s end customers who are demanding sustainable products and solutions.T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  2 7 Despite the lack of concrete commitments resulting from the recent Copenhagen Climate Conference. Fortunately.

This can involve strategic partnerships and joint initiatives with engineers. . working together on R&D projects and providing value add services.4 Developing joint venture relationships European companies can develop joint ventures and strategic alliances with competitors — in the Middle East to gain access to feedstocks and in China to develop a local market presence.2 8   T HE FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY 3. Inevitably. rather than simply getting drawn into competition with lower-cost rival producers.” KPMG. without giving away too much of their technological advantage. 2009.”40 3. Now is the time to focus on the success of their customers. supplying commodities or competing on price. As Peter Linder of Clariant in China stated. researchers and other professionals from different companies. The benefits of these initiatives are clear. The most successful European chemical companies in the coming years are likely to be those that embrace the changing dynamics in the global industry and position themselves to take advantage.3 Strengthening customer relationships European chemical companies should seek to expand beyond just trading. so as to preserve their long-term competitiveness. “We have to keep our sales force focused on adding value through strong customer relationships. joint relationships involve an element of trade-off and a challenge for European chemical companies will be to establish agreements that allow them to enjoy the benefits. 40 “Chemicals in China: Responding to New Challenges. but they also require new strategies and attitudes on the part of companies.

.T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  2 9 “” European chemical companies should seek to expand beyond just trading. supplying commodities or competing on prices.

plants and extracts) 50% Inorganics (Inorganic acids and bases. Germany. Cognis is one of the world’s leaders in specialty chemicals. glucose. For example. providing raw materials and ingredients for products for personal and home care. salts) 8% Inorganics (Silicates) Petrochemicals 17% 25% *Core businessess CC. Cognis has also taken care to establish a local presence in emerging markets such as China. fats and derivatives. The company recognizes that the time and cost required to manufacture products in Europe and then ship them to Asia would hurt their competitive position.3 0   T HE FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY 4 Case study – Going green with Cognis – a flexible strategy Raw material basis of Cognis in terms of volume in 2008* Naturals (Natural oils. FP Source: Cognis. lubricants. As a result. Cognis has focused on expanding their presence in Asia through plant expansions and joint ventures with local companies. N&H. its raw materials are gathered from a number of countries across Asia. . dedicating its activities to a high level of sustainability and the use of natural source raw materials and ingredients. As a European chemical company. In addition. 2009 Headquartered in Monheim. the use of natural raw materials such as fats and plant extracts has significantly reduced its dependence on petrochemical feedstocks from the Middle East. Cognis is one of the leaders in green solutions for the chemical industry. enabling it to target rapidly moving markets for specialty chemicals and consumer goods. the strategies adopted by Cognis offer several advantages. nutrition and health. agriculture and manufacturing. and for a number of other industries such as coatings and inks. further reducing its dependence on any particular region. the Pacific and South America.

This emphasis on innovation applies to its focus on product performance. As with other European chemical companies. “In Europe.” “” Cognis is also recognized as a leader in green solutions for the chemical industry. Executive Vice President Care Chemicals. we have unique challenges but also unique advantages in terms of technology. recently summed up the situation facing many of today’s European chemical companies. innovation and flexibility.T H E F U T U R E O F T H E E U R O P E A N C H E M I C A L I N D U S T R Y  3 1 In its European plants. it can leverage a strong background in R&D to help ensure that its products remain competitive in global markets. . Those chemical companies that work hard to balance sustainability with performance and price will succeed. Cognis continues to develop more efficient manufacturing processes to reduce costs and improve their regulatory position. Richard Ridinger.

BASF estimates that it saves more than EUR500 million each year at its Ludwigshafen site alone. 2009 Headquartered in Ludwigshafen. functional solutions. the excess heat given off in chemical reactions is immediately converted into steam and is fed into the steam network so that it can be made available to other plants.K. Le Havre BULG ARIA Sofi a Pristina Tir an a VATIC AN CIT Y Mediterranean Sea SERBIA Chemsite Varna Danube Belgr ade Adriatic Podgorica Sea MONT.) Ceut a Alboran (SPAIN) Andorr a l a V ell a Marseille ANDORRA Valencia HUNG ARY SAN MARINO CROATIA Sar aje vo Rome KOS. Germany. Bordeaux CENTRAL ENE Homyel' Hamburg Bremerhaven Eemshaven Amsterdam GREAT BRITAIN Brest CZEC H REPUBLIC SL OVAKIA Brno Z ü rich PYR BELARUS POLAND Vienn a Brunsbuttel Wilhelmshaven Minsk RUSSIA Hrodna Pr a gue NORTH SEA Smolensk Mahily ow Lódz´ Wr ocla w GERMANY Nantes Z ar agoz a Vilnius War sa w Poznan´ Leipzig Guernse y (U. agricultural solutions and oil and gas. Skopje MACEDONIA T hessaloní ki ALB. Production plants are connected by an intricate network of pipes that provides an environmentfriendly method of transporting raw materials and energy quickly and safely.com. The BASF portfolio comprises chemicals. Germany. 2009 “Sustainable Manufacturing of Petrochemicals in Europe. Dr. 2009 42 The Verbund principle also applies to energy. In Verbund. basf. This was 41 where the Verbund concept was developed and optimized before it was applied to other sites around the world.K. as well as optimization of logistics and infrastructure. FRANCE MASSIF Lyon Turin Madrid PORTUG AL Genoa Toulouse SPAIN Sevilla (U. September 21.”42 .K. Albert Heuser. “strengthened cooperation between companies and efficient Verbund structures within each company.) HEBRIDES North Atlantic Ocean Oslo Glasgow Edinbur gh North Sea UNITED Belfast IREL AND Isle of Man (U.41 Speaking about the importance of the verbund concept. By linking plants in a Production Verbund. The largest Verbund site in BASF Group is located in Ludwigshafen. In addition. Tyrrhenian Sea Sardinia CHANNEL Dunkirk Ghent Antwerp BELGIUM L.) Bilbao Vits yebsk LITHUANIA Hambur g emen London Bay of Biscay Sea Kaliningr ad LAT VIA Rig a Öland Barents Bornholm Gdansk ´ Leeds Manchester Liverpool KINGDOM Celtic Sea Gotland Malmö Copenha gen Cardiff Porto RUSSIA Tallinn EST ONIA Göteborg Aberdeen Dublin ALAND ISLANDS Stockholm Stavanger GERMANY Chem Cologne Ludwigshafen FRANCE Istanbul Bur EY TURKEY GREECE Aegean Sea ·Izmir Athens Cagliari Ionian Sea Palermo Algier s Sicily Rhodes Sea Source: European Chemical Site Promotion Platform. performance products.K. will play a major role in the European petrochemical industry’s future.” Chemical Week. plastics. ITALY Myk ROMANIA NETHERLANDS Zeebrugge Buchar est BOSNIA AND HERZEGO VIN A Naples Balearic Sea Chisin au Iasi ¸ MOLDOVA Z a gr eb Ligurian Flor ence Sea Corsica BALEARIC ISLANDS Gibralt ar Má laga Strait of Gibraltar ES MONAC O Chernivtsi ClujNapoca Bud apest Ljublj an a SL OVENIA Venice Barcelona Tagus Lisbon Milan London UKRAINE L'viv Kr ak ów AUSTRIA Rotterdam Kyiv Rivne Bratisl a va LIEC H. BASF is widely recognized as the founder of the verbund manufacturing concept.) Jersey (U. In the Energy Verbund. Head of BASF’s Petrochemicals Division stated. Worldwide.) Irish Sea DENMARK Berlin Fr ankfurt am Main g Stuttgart Munich Strasbour g Vaduz Bern GenevaSWITZ.3 2   T HE FUTURE OF THE EUROPEAN CHEMICAL INDUSTRY 5 Case study – BASF – verbund manufacturing Major Chemical Cluster in Europe Bergen ORKNEY ISLANDS Rockall (U.K. by-products from one plant can be used as raw materials elsewhere. they link production plants intelligently to save resources and energy. they are able to create efficient value-adding chains starting with basic chemicals and extending to higher value products like coatings and crop protection products. BASF is one of the world’s leading chemical companies with production and sales facilities in many economic regions. BASF operates six Verbund sites and about 330 production sites.

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Tel: +34 932 532 917 e-mail: lawalter@kpmg. Tel: +33 1 55 68 68 72 e-mail: wlaurianodorego@kpmg.uk In Germany In Belgium Vir Lakshman KPMG AG Wirtschaftspr¸ fungsgesellschaft Tel: +49 211 475 6666 e-mail: vlakshman@kpmg.stirling@kpmg. Although we endeavor to provide accurate and timely information. © 2010 KPMG International Cooperative (“KPMG International”). Member of the KPMG network of independent are with KPMG International.com 34 T HE FU TU R E OF T H E EUROPEAN CHEM ICAL INDUSTRY Contacts: European Sector Leader In Spain Chris Stirling KPMG in the UK Tel: +44 (0)20 7311 8512 e-mail: chris. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”).com Guido De Grefte KPMG Belgium Tel: +32 (0)2 708 48 93 e-mail: gdegrefte@kpmg.V. No member has any authority to obligate or bind KPMG International or any other member vis-à-vis third parties. a Swiss entity.uk Luis Walter KPMG KPMG S. Publication name: The Future of the European Chemical Industry Publication number: 1001503 Publication date: January 2010 .com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.com In Netherlands Author Lex Gardien KPMG N.A.co.nl Paul Harnick KPMG in the UK Tel: +44 (0)15 1473 5226 e-mail: paul.A.com Erik Willems KPMG Holding AG/SA Tel: +41 44 249 45 20 e-mail: ewillems@kpmg.lex@kpmg.co.kpmg. Tel: +31 (0)10 453 4163 e-mail: gardien. KPMG International provides no client services. a Swiss entity. there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.harnick@kpmg. nor does KPMG International have any such authority to obligate or bind any member All rights reserved.es In France In Switzerland Wilfrid Lauriano do Rego KPMG KPMG S.