Chemical margins for US ExxonMobil squeezed by feedstock hikes

31 January 2011 18:58  [Source: ICIS news]

HOUSTON (ICIS)--Chemical margins for ExxonMobil have been squeezed in recent months by rising feedstock costs and additional industry capacity coming on line, executives with the US-based oil major said on Monday.

While fourth-quarter chemical earnings of $1.07bn (€791.8m) were up 49% year on year, they were down 13.2%, or $160m, from the third quarter, said ExxonMobil chairman Rex Tillerson.

That trend continued into January, the company said.

“The biggest impact quarter on quarter was the rapid rise in feedstock costs that really outpaced price increases,” Tillerson said on an earnings conference call.

ExxonMobil did not specify which feedstocks it was referring to. Contract and spot prices for base chemicals such as benzene and propylene have surged to begin 2011.

Chemical margins had also weakened of late as new industry capacity came on line, he added.

Tillerson noted that the global economy appeared to be stabilising, with modest demand growth in the US and Europe.

Within chemicals, however, demand growth was somewhat being offset by rapidly-rising feedstock costs and new capacity, the company said.

Overall, ExxonMobil reported fourth-quarter earnings before special items of $9.25bn, up 53% year on year.

($1 = €0.74)

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By: Ben DuBose
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