14 January 2009 20:20 [Source: ICIS news]
HOUSTON (ICIS news)--The gloomy world economy led to massive drops in prices and demand for US petrochemicals and plastics in December, the Federal Reserve Board (Fed) said on Wednesday.
The Fed, the US central banker, made the comment in its "Beige Book", an economic survey which covers each of its 12 districts, including the petrochemical-heavy Dallas district. The latest Beige Book covers events in December.
During that time, demand and prices have fallen sharply for petrochemicals and derivative plastics, the Fed said. The drop resulted from declines in housing, automobiles, manufacturing and exports.
At least 10 large plants have shut down in the Gulf coast, and others have cut runs, the Fed said. Layoffs have been widespread among producers and their contractors.
For oil products, prices fell as quickly as those for crude, leaving refiners with weak margins, the Fed said. Despite those margins, utilisation rates remained at about 85%.
Overall, nearly every sector of the nation's economy declined in nearly every Federal Reserve district.
The housing market continued to decline, and commercial real-estate markets deteriorated in most districts, the Fed said. Lending activity declined in several districts, with credit either remaining tight or becoming even more restrictive.
Automobile sales were weak, the Fed said. Manufacturing activity fell in most districts and across a wide range of industries.
Retail sales were weak, particularly during the holiday shopping season, the Fed said. In fact, a majority of districts reported deep discounting among retail stores.
Agricultural conditions were mixed due to weather, the Fed said. Some district reported that fertilizer costs have moderated.
Some niche sectors performed well within individual districts. For example, the aerospace industry remained active in the San Francisco district, the Fed said.
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