Dow closure to help chlor-alkali margins - BoA

06 September 2006 14:09  [Source: ICIS news]

HOUSTON (ICIS news)--Bank of America (BoA) said on Wednesday that Dow's plans to close an Alberta, Canada chlor-alkali plant will support prices and extend peak-like margins for the product in North America.

"With operating rates near 92%, we view the chlor-alkali market as steady and attractive with chlorine tighter than caustic for now. Provided natural gas remains near $6/m BTU, we would anticipate flattish pricing with attractive profitability through year-end followed by only modest erosion over the next 1-2 years as the cycle moves past peak," the bank said.

BoA said Dow's decision last week to close 450,000 tonne/year of chlorine capacity (3% of North American industry capacity) at Fort Saskatchewan, Alberta by 31 October will likely support North American industry operating rates at more than 90% through 2007 with positive implications for pricing and margins.

The bank said chlorine producers are unlikely to get the full $25/ton (€17/tonne) price increase they have proposed for the fourth quarter due lower water treatment and polyvinyl chloride demand and lower prices for natural gas feedstock.

BoA said the Dow capacity reductions are most positive for Georgia Gulf and PPG, followed by Dow and Westlake.

By: Patrick Crow
+1 713 525 2653

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