February 2000

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HP Insight: Petrochemical cycles – either you 'love it or hate it'

Commodity petrochemicals are a "love/ hate" business. When margins and profits are high, HPI operating companies are blissful and eagerly embark on spending sprees. They plan and build new capacity to..

Romanow, Stephany, Hydrocarbon Processing Staff

Commodity petrochemicals are a "love/ hate" business. When margins and profits are high, HPI operating companies are blissful and eagerly embark on spending sprees. They plan and build new capacity to earn even more revenue. Consequently, too much additional manufacturing capacity is constructed worldwide, supply exceeds demand, prices drop, margins drop and earnings plummet. Thus, petrochemical producers are again struggling to meet operating expenses and "hating" the bottom of the cycle. This cycle is repeated over and over (Fig. 1).1 However, some companies embrace this roller-coaster market. At the Chem Systems 19th Annual U.S. Seminar, Jan. 26–27, Daniel Boivin, Senior Vic

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