06 September 2010 17:15 [Source: ICIS news]
By Nigel Davis
August commentary from the big sector players put the second-quarter performance and the outlook into perspective.
The second half was expected to be more difficult than the first. “We see a more stabilising-towards-decreasing environment rather than the increasing environment in the first half of the year,” said Borealis CFO Daniel Shook.
Volumes, however, were relatively flat year on year, although the company noted a shift back to durable products used in the automotive sector and in infrastructure.
It is largely higher-value products for these sectors that will help buoy the major European and US-based producers in what still is a difficult time.
LyondellBasell noted earlier in the year that it was seeing record volumes for its polypropylene composite materials and alloys in the European and Asian markets. That situation was relatively unchanged in the second quarter.
Polypropylene itself was finding a ready market in products for automobiles.
Linear low density polyethylene (LDPE) has been tight in
The question now, however, has to be whether the relatively quiet summer period will give way to a (relatively) robust last quarter. Expectations are not great but they are not miserable either.
European polypropylene buyers are resisting price hikes, ICIS reported last week, noting the frustration of some. That having been said, producers looked as though they might be more successful on LDPE, a product that currently is beset by supply problems.
There has been downward pressure on US polyethylene (PE) prices and it is not certain that the rises proposed for September material have stuck.
Yet in late August, NOVA Chemical CEO Randy Woelfel said that domestic demand continued to be strong.
The North American market had also held on to relatively high levels of export demand based on competitive natural gas costs, he added.
The competitive (versus crude oil) gas cost still gives players in
LyondellBasell has noted that the
The ICIS margins reports show how healthy a great deal of business has remained.
Integrated PE margins in
LyondellBasell said in August that it had taken advantage of supply-driven market tightness in several businesses in the first half. "However, our view is that the long-term fundamentals have not changed appreciably,” said CEO Jim Gallogly.
That is very much the story in polyolefins generally in the final weeks of the third quarter.
In Gallogly’s words: “The rates at which the world economy recovers and new capacity comes online in the Middle East and Asia will significantly influence operating rates and margins going forward."
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