European Chemical Industry Development towards Large Clusters

The clustering of chemical industry has always been a magic weapon for improving the competitiveness of chemicals in Europe. However, under the competition of low-cost products in the Middle East and Asia, the original chemical industry clusters have been impacted and need to be consolidated and expanded. “The full play of chemical bases and chemical clusters is the key to the future of European chemical industry,” said Fred Du, director of the European Chemical Website Promotion Platform. He believes that integrating multiple clusters into larger clusters It is the direction of future development.

Scale benefits are obvious

Du Lishi stated that the advantage of clustering is the ability to share infrastructure, services, and ancillary equipment. The further development of large clusters will increase inter-cluster integration, optimize existing assets, increase interdependence among enterprises, and help avoid duplication of efforts.

Mike Clements, director of transaction services for PricewaterhouseCoopers, believes that the advantages of clustering are obvious. It can increase cooperation between research, business development, and training, and it can also strengthen the links between companies and local universities. At the same time, due to the completeness of service facilities, the major cost of new chemical plants will gradually decrease. PwC compared two chemical plants, which use the same process to produce the same product at the same scale. One is an independent production base built in central Europe and the other is located in a large chemical cluster. The comparison shows that capital expenditures for factories built in the cluster can be reduced by about 30%.

To promote the construction of chemical clusters, the European Chemical Regional Network (ECRN) launched an initiative to increase the effectiveness of the cluster model innovation policy. Thomas Stemmets, the local government official in charge of the operation, said that the chemical industry has generally recognized the benefits of cooperation and that clustering is the only way for the company in the future. Innovative cooperation is very important.

Clustering is different from integration

"Integration" refers to the integration of multiple value-added industrial chains. Although BASF's integration model is not unreasonable, the future of the production base is a combination of multi-company cluster production, such as the former Hoechst production base in Frankfurt and the former Harles production base in Marl. Du Lishi stated that small independent production lines will not be competitive in the future, and large companies such as BASF have achieved economies of scale from their integrated operations. But "it is very difficult to build a Ludwigshafen port in Europe. People can improve their integration by building joint ventures near industrial clusters or individual production sites."

Dow Chemical's strategic focus is to achieve US production through the sale of some assets or joint ventures with other companies. Du Lishi said: "In Dow's new strategy, you will find that Dow may reorganize some production bases." The chemical production base is an extension of its geographical position and is connected by pipelines. For example, Germany's CeChemNet, which was built in 2006-2007, contains production sites for Schwarzschild, Pistritz, Schkopamp, Bitterfeld, Loiner and Berlin. Under the correlation of hydrogen, oxygen and raw material pipe network, the base has strong interdependence. Du Lishi thinks: “Regarding regional restrictions, in some areas where it is difficult to form large clusters, additional networks like CeChemNet will be formed.”

Product flows depend on each other

A potential super cluster in Europe consists of four clusters of Antwerp-Rotterdam-Rhine-Ruhr (ARRR), with Antwerp in Belgium, Rotterdam in the Netherlands, and Ruhr and Rhein in Germany.

The Rheinland Industrial Area encompasses the ChemiePark Hoechst production base and BASF Ludwigshafen Base. The Ruhr area includes ChemSite and ChemCologne. Du Ritzkline said: "These four clusters have strong product mobility and interdependence."

Both the Port of Antwerp and the Port of Rotterdam are well-defined chemical clusters, and their development benefits from the strong leadership of their respective port authorities. Du Lishi said: “In this interest-related model, production companies, energy supplies, logistics, trade unions, and local universities are the protagonists in formulating long-term strategies for clusters.” The two ports compete with each other and complement each other. The way to deal with chemical investment and business models to attract different positions in different value chains and value chains. Rotterdam refineries are the majority, Antwerp is the majority of crackers, and naphtha is the link between the two. Rotterdam has attracted more bulk chemicals, while Antwerp has introduced more intermediates and downstream chemicals.

ChemSite and ChemCologne clusters are public-private partnerships. ChemSite covers six cities, of which Mal, Gelsenkirchen and Dortmund are mainly supplied by two BP pyrolysis plants. Other companies include Saudi Basic Industries, Evonik and Sasol. ChemCologne includes Leverkusen, Dormagen and Krefeld, supplied by Ingres and Shell refiners and crackers. The main companies are Bayer MaterialScience and LANXESS.

Clements said that chemical companies in Asia and the Middle East have already seen the advantages of the European cluster model, and large clusters also appear in these areas, such as Nanjing, China and Jubail, Saudi Arabia.