US basic chem production to drop in 2007 - group

31 May 2007 18:02  [Source: ICIS news]

HOUSTON (ICIS news)--This year, US production of basic chemicals should drop 2% compared with 2006, according to a report released on Thursday by the Manufacturers Alliance/MAPI.

The alliance tracks 27 sectors and makes forecasts for 24.

The alliance sees a drop in basic chemicals because of sluggish growth in the industrial sector. In addition, higher feedstock prices are eroding profit margins, and higher petrochemical prices are depressing demand.

However, chemical trade is increasing, with first-quarter petrochemical exports rising by 67% over the same time last year. Inorganic exports increased by 22%, the alliance said.

In the first quarter, basic chemicals production rose by 2%, due to petrochemicals, the alliance said. Inorganic production was flat, and synthetic dyes and pigments fell by 4%.

For manufacturing as a whole, first-quarter production grew by 0.9% compared with the same time last year, the alliance said.

For the year, the alliance is predicting a growth rate of 2.1%, below last year's rate of 4.7%. In 2008, the rate should be 3.3%

The alliance is predicting growth because the manufacturing industry has worked through its excess inventory, said Daniel Meckstroth, the chief economist of the group. Moreover, US exports have stopped their decline, he said.
By: Al Greenwood
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