Fitch sees steady margins for intermediate chemicals

13 December 2005 00:20  [Source: ICIS news]

NEW YORK (ICIS news)--North American intermediate chemical producers are likely to maintain and even expand margins by the end of 2006, Fitch Ratings said on Monday.

Capacity additions are expected to be limited in the region next year while rationalisation of capacity is expected to continue in a high-cost environment, explained Jennifer Quinn of Fitch.

Demand is expected to increase for most chemicals as the US economy continues to grow, although Fitch expects economic growth is likely to be lower than 2005, she added. “We believe buyers will be more concerned about availability of product versus price. Producers should be able to push price increases through the chain over several quarters,” said Quinn.

Fitch also expects that the cost pressure on intermediate chemical producers will not be as severe as 2005. In general, most intermediate producers have successfully implemented price increases to offset higher raw material cost, and Fitch expect this trend to continue next year.

By: Malini Hariharan
+65 6780 4359

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