15 March 2011 19:23 [Source: ICIS news]
HOUSTON (ICIS)--The impact of the Japanese earthquake could cut the nation's demand for North American exports in the short term, which would lower margins, an analyst said on Tuesday.
However, prices in the long term could rise for North American exports if Japanese production spends enough time off line, said Laurence Alexander, an equity analyst for Jefferies & Co, in a research note.
Higher prices, in turn, could improve margins for North American producers, Jefferies added.
Alexander said that following the earthquake, 23% of Japan's ethylene capacity was shut down, which represents 5% of northeast Asian capacity and 1.3% of global capacity.
For polyethylene (PE) meanwhile, 14% of Japan's capacity was shut down, he added, representing 3% of northeast Asian capacity and 0.6% of global capacity.
For propylene, 37% of Japan's fluid-catalytic-cracking (FCC) capacity was shut down, he said. This represents 6% of northeast Asian capacity.
Assuming that all production was through naphtha, Jefferies estimated up to 800,000 tonnes/year of propylene production could be shut down if 1.8m tonnes/year of ethylene capacity was off line.
For polypropylene (PP), 25% of Japan's capacity was shut down, which represents 4% of northeast Asian capacity and 1.4% of global capacity, Jefferies added.
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