InterBulk Group plc, the publicly-traded logistics group, has warned that European polymer markets would continue to come under pressure from new capacity in the U.S., driven by shale gas, and other cheap feedstock and energy regions.
The group, which transports dry and liquid goods and materials around the world, said its dry bulk division had been heavily impacted by what it called “weakness and volatility in the European polymer markets” and plant closures in the United Kingdom.
It said its overall revenue for the year ending Sept. 30 of 256.3 million pounds ($398.5 million) was 6 percent lower than in 2013, “mainly due to closures of manufacturing units in the European polymer industry.”
InterBulk said this included the closure of production plants by its customers, both on a temporary and permanent basis, which affected volumes and equipment balances.
Transportation activity, as measured by moves performed, was down 11 percent year-on-year, and the revenue from temporary storage declined by 18 percent.
“The major factor was plant closures in the U.K.,” the group said in a statement. “Export opportunities as a result reduced leading to higher empty repositioning back to the continent. It will take some time to mitigate these plant closures given the continued pressure on European polymer producers from regions with access to cheap feedstock and energy.”
InterBulk said the European polymer market was still adjusting to the pressures on global flows and pricing from substantial capacity additions using cheap feedstock in the Middle East, “and the wave of new plastics capacity being constructed in the U.S. Gulf based on ethane from shale gas will simply heighten this pressure on the European producers in the coming years.”
Loek Kullberg, InterBulk's CEO, said the group believed there would be some expansion of European production in the PET sector, where it had a large market share, next year.
“However, this market also continues to be challenged by increased imports from outside Europe coinciding with sluggish demand growth from the wider economic issues in Europe. As a result, the revenue outlook remains both uncertain and volatile depending on the success in highly competitive export markets.”