Dow, LyondellBasell to benefit from China diesel measure - analyst

26 November 2010 16:50  [Source: ICIS news]

TORONTO (ICIS)--Ethylene producers such as Dow Chemical, LyondellBasell and Westlake should benefit from higher prices due to production cutbacks in China, an analyst said on Friday.

China’s National Development and Reform Commission (NDRC) this week told producers Sinopec and PetroChina to address the country’s diesel shortage, prompting reductions in ethylene output there.

Hassan Ahmed, head of research at New York-based equity research firm Alembic Global Advisors, said an estimated 10-15% reduction in Chinese ethylene production, caused by the country’s diesel supply squeeze, could tighten global ethylene utilisation rates and support price hikes in ethylene and ethylene derivatives in the near term.

China represented around 16m tonnes of ethylene capacity, or around 11% of global supply, Ahmed said.

If the Chinese policy was implemented, recent industry ethylene prices hikes, and possible additional increases, could be more easily implemented, he added.

Beneficiaries in the US would include Dow Chemical, LyondellBasell and Westlake. Outside the US, Middle Eastern producers such as SABIC would benefit, Ahmed said.

For more on Dow, LyondellBasell and other producers visit ICIS company intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Stefan Baumgarten
+1 713 525 2653

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