24 December 2008 22:17 [Source: ICIS news]
By William Lemos
HOUSTON (ICIS news)--The sharp downturn in the US economy in the second half of 2008 is expected to last through at least the first six months of 2009, stifling demand for petrochemicals and keeping a lid on monomer prices.
The weaker economy and the drop in demand will likely draw market activity to a halt, one olefins market participant said.
“We might as well all go fishing in 2009 because it does not look like there will be much else to do,” the source said.
US monomer prices went into a tailspin in the fourth quarter of 2008, falling by more than 80% from record highs in the summer amid a slump in ?xml:namespace>
US refinery-grade propylene (RGP) spot prices were as low as 12 cents/lb ($265/tonne, €191/tonne) in December, down from a peak of nearly 80 cents/lb in July, while ethylene plummeted to about 15 cents/lb from a peak of 70 cents/lb, according to global chemical market intelligence service ICIS pricing.
The dramatic drop was not the exception but the rule for the
In a best-case scenario, demand may pick up after July if consumer spending improves in the first half of next year, the source said, adding that
In the meantime, the petrochemical industry will continue to see layoffs and production shutdowns, the consultant said.
The impact of the latest
Polyethylene (PE), also a key end-market for ethylene, may fare slightly better because people may spend less but they still have to eat, one source said, referring to PE used in food-packaging applications.
But chemical demand is down elsewhere, especially when disposable income is involved, one market participant said.
The weak outlook for 2009 has triggered a series of production stoppages in the
Flint Hills Resources (FHR) on 6 November said it would permanently close its 348,000 tonnes/year
The company then announced a shutdown at its
The company said it would temporarily close its Chocolate Bayou plant in
The shutdown at the 544,000 tonne/year unit was the second announced by Equistar.
The company had previously idled its
The figure does not take into account the permanent shutdown announced by FHR in
Dow said on 4 December it would cut operating rates in
Stoppages at US olefins plants include:
* Equistar (Chocolate Bayou,
* Westlake Chemical (
* Chevron Phillips (
* FHR (
* Chevron Phillips (Cedar Bayou,
* Chevron Phillips (Sweeny 22,
* FHR (
* Equistar (
* ExxonMobil (
* DuPont (
($1 = €0.72)
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