US PP production falls amid mixed economic reports - ACC

01 May 2009 21:11  [Source: ICIS news]

HOUSTON (ICIS news)--US polypropylene (PP) production slipped for a second consecutive month, falling to 1.28bn lb (580,604 tonnes) in March from 1.32bn lb in February as economic reports remained mixed amid the global recession, the American Chemistry Council (ACC) said in its weekly economic report released on Friday.

PP production was off 15.7% on a year-over-year basis and down 10.3% year to date.

Sales of PP, which is found in packaging, automotive parts, fibres and appliances, followed suit, down 13.3% year over year.

Likewise, US soda ash production plunged to 739,000 tonnes in February from 888,000 tonnes in January as inventories rose, the ACC said.

Soda ash is primarily used in glassmaking, as well as in manufacturing other inorganic chemicals.

Polystyrene (PS) production, however, rose to 405m lb in March, with sales increasing as well, down only 10.3% from March 2008, the ACC said. Comparative figures for February were not released in the report.

Railcar loadings of polymers and basic chemicals rose by 159 from the previous week to 27,292 railcars, off 14.9% on a year-over-year basis. Loadings have risen for seven of the past 13 weeks, indicating stabilising economic activity, the ACC said.

Chemical shipments fell 2% in March to $50.2bn (€37.7bn), negating a 2% increase in February. The decline was across the industry with particular weakness in pharmaceuticals, agricultural chemicals and paints, coatings and adhesives, the ACC said.

Meanwhile, chemical inventories rose 0.5% to $65.6bn, reversing declines of 0.8% in February and 4.0% in January and appearing to confirm recent sentiment from chemical executives that the period of inventory destocking is over.

On a broader economic basis, the ACC said that despite a decline in the US income and consumer spending indexes in March, consumer confidence rose sharply in April, indicating that the worst of the recession may be over.

“We expect consumers to start spending again as the combination of pent-up demand and fire sale prices begin to work their magic,” the report said. “As consumers work off remaining inventories, the goods-producing industries will re-engage and jobs and more production will follow.”

However, the ACC cautioned that the swine flu outbreak had the potential to limit the recovery in consumer confidence, and thus delay growth in consumer spending.

The ACC’s market capitalisation of US basic chemical and specialty chemical companies continued to outperform the overall business market, rising 4.7% for the week through Thursday while the S&P 500 increased only 2.5%.

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By: Ben DuBose
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