US shale gas improving cost structure for chemical markets

08 December 2009 20:09  [Source: ICIS news]

MIAMI (ICIS news)--Stable prices and abundant supplies of natural gas locked in shale will substantially improve the cost structure for the US chemical market, an industry consultant said on Tuesday.

Over time, US chemical producers will likely regain market share, said Darryl Rogers, senior consultant at Purvin and Gertz. Rogers was speaking on the sidelines of the 2009 CMAI World Methanol Conference.

"It won't happen overnight, but in the longer term, the general consensus is probably starting to change a little bit where we've seen the US, in particular, behind the curve," Rogers said.

He expected that the competitive position of the US chemical industry will improve because many producers are switching their crackers to lighter feeds from higher-priced oil-derived feedstocks.

This has led to massive cost savings for producers, as the growth in domestic gas supplies is reducing the need for imports and keeping gas prices low relative to oil and other international gas prices, Rogers said.

However, compared with other regions around the world, North American chemical production still remains at a higher price.

"We won't ever beat the Middle East, but we'll likely gain some of that market share back," Rogers said.

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By: Steven McGinn
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