Luc Leunis (PVC producer Vynova): ‘Our biggest concern? Surviving the Next Months’ – Companies

Luc Leunis (PVC producer Vynova): ‘Our biggest concern? Surviving the Next Months’ – Companies
Luc Leunis (PVC producer Vynova): ‘Our biggest concern? Surviving the Next Months’ – Companies
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Vynova in Tessenderlo is the second largest PVC producer in Europe and the number five in caustic soda. It is also one of the largest energy consumers in Belgium. Due to the high prices for gas and electricity, Vynova has to reduce its production. “The big risk is that basic chemistry in Europe will be squeezed,” says production director Luc Leunis.

Monday Sept 12. That morning, gas prices fell below 200 euros per megawatt-hour, following the Ukrainian army’s successes in the war against Russia. Nevertheless, Luc Leunis, the production director of the chemical group Vynova, remains very cautious. He poses for the photo under a blazing late summer sun on the 53-hectare site in Tessenderlo, Limburg. But for the producers of basic chemicals, the barometer points to stormy weather. “Basic chemical producers across Europe are being hit. We are the most affected because we are so energy-intensive. Our demand has been lost due to the high prices.”

Monday Sept 12. That morning, gas prices fell below 200 euros per megawatt-hour, following the Ukrainian army’s successes in the war against Russia. Nevertheless, Luc Leunis, the production director of the chemical group Vynova, remains very cautious. He poses for the photo under a blazing late summer sun on the 53-hectare site in Tessenderlo, Limburg. But for the producers of basic chemicals, the barometer points to stormy weather. “Basic chemical producers across Europe are being hit. We are the most affected because we are so energy-intensive. Our demand has been lost due to the high prices.” LUC LEUNIS. “In normal times, ethylene, the raw material for PVC, is our largest cost item. Today that is energy. Gas and electricity represent more than half of our production costs. Normally this is 15 to 20 percent. Energy prices have increased almost tenfold. Before corona, electricity about 40 euros per megawatt hour. For gas we paid 15 to 20 euros per megawatt hour. Those prices were very stable. Fluctuations of one tenth were exceptional. Gas today costs 230 euros, a week ago 300 euros per megawatt hour. For electricity we speak of 400 to 700 euros per megawatt hour.” LEUNIS. “We can only welcome the European measures. Price caps will probably have an effect on market speculation. It will reduce the appetite for trading at exuberant prices. Now there is a lot of speculation in that market. Speculators are driving prices up. That leads to “The energy prices have fluctuated sharply, from 20 to 40 percent per day. That has never been seen. The problem is that we have to pay those prices. Fundamentally, the price is of course high, because there is a shortage, because of the war in Ukraine.” LEUNIS. “If we want to make a profit, at least 80 percent of our production capacity has to be running. We have a huge amount of fixed costs. Our factories run 24 hours a day. In Tessenderlo alone, we invest 30 to 40 million euros per year. But we can’t do it with PVC. more competitive with the rest of the world High energy prices make PVC in Europe the most expensive in the world Our sales prices have almost doubled, while the American competitors can still produce for the most part at the same price They can now earn more money in Europe than in their traditional markets, Southeast Asia and South America. The Americans send their ships to Europe. The big risk is that the basic chemicals in Europe will be squeezed.” LEUNIS. “In the past two years, Europe has been somewhat protected. The logistics chains were thoroughly disrupted. The supply lines were limited. But today they are running again for a large part. The European chemical industry has also been struggling with overcapacity for some time. We exported PVC to Africa, India, Turkey and South America. We played in the world market. Those exports have disappeared.” LEUNIS. “It is used in thousands of products. Vinyl floors, windows and doors are the classic applications, as are pipes, sewers and downspouts. PVC can also be found in the interior of cars, such as the dashboards. It is widely used in medicine, for such as blood bags, catheters, tubes and baxters. For example, the packaging of pills is also made of PVC, just like bank cards.” LEUNIS. “We are the fifth largest in caustic soda in Europe, with an annual production of 300,000 to 400,000 tons. It is used in almost all chemical products, including for the regulation of the acidity of waste water. In the aluminum industry, the aluminum from the ore leached with caustic soda. The paper industry is a major consumer. Soaps and javelin are also typical derivatives. The prices of caustic soda became 2.5 times more expensive in a year. But that price increase does not compensate for the increased energy prices.” Is there also competition from the United States for caustic soda? LEUNIS. “Hardly. We hardly export. We produce for customers in Belgium and neighboring countries. The transport costs are expensive. Caustic soda is a liquid. You transport half of it water, with tankers. A load by ship to Spain or Sweden is sometimes possible “There is competition from the United States for those long distances. Caustic soda is also used immediately. There is relatively little stock. Just in time is classic in the chemical industry.” LEUNIS. “Natural gas and electricity are not only used for heating, but we mainly use it as part of the chemical production process for our base chemicals. Natural gas heats our cracking furnaces to 600 degrees Celsius, after which our products are made with a chemical process. For the production of 1 ton PVC we use 2 megawatt hours of natural gas and 2 megawatt hours of electricity.” LEUNIS. “No. There are no electric cracking furnaces yet. We don’t think that technology will be there in fifteen years.” LEUNIS. “Cracking furnaces can in principle work with hydrogen. But you make it with electricity. As long as you make electricity in gas-fired power stations, the use of hydrogen makes little sense. You lose energy at every intermediate step. It’s energetic madness. Then it’s better to use natural gas for the time being. incinerate directly. That is more efficient.” LEUNIS. “That is possible in theory. But then we have to install more than a hundred wind turbines on and around our site. Will we get permits for that? The biggest problem is that they can only supply electricity if there is enough wind.” LEUNIS. “They could drop in the coming months if the economy starts to sputter. That is not a good reason. The entire chain is slowly hitting a wall. We have to almost double our prices. That is different from an average inflation of 10 percent. A recession is almost unavoidable. Our main concern is that we survive that period. We expect more stability in the coming months, but then combined with a recession.”


The article is in Dutch

Tags: Luc Leunis PVC producer Vynova biggest concern Surviving Months Companies

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