22 March 2011 19:04 [Source: ICIS news]
HOUSTON (ICIS)--North American and European chemical producers will likely benefit from higher prices because of disruptions in Japan's industry, Moody's Investors Service said on Tuesday.
Moody's attributed these disruptions to power cuts and fuel shortages.
Prices will likely increase for intermediate chemicals, Moody's said. For commodity chemicals, export demand should rise in the first half of the year.
Georgia Gulf, BASF and Dow Chemical could benefit the most, Moody's said.
North American lumber producers will also benefit once reconstruction starts in Japan, Moody's said.
The disasters in Japan could cause the most disruptions to technology companies and automakers, Moody's said.
The automobile industry is a major end market for such chemicals as polypropylene (PP); nylon; acrylonitrile butadiene styrene (ABS); polyurethane flexible foam; synthetic rubber; and paints and coatings.
The American Chemistry Council (ACC) estimates that each automobile contains an average of $2,700 (€1,890) worth of chemicals.
Disruptions among parts producers in Japan have already caused General Motors (GM) to suspend operations at a plant in Shreveport, Louisiana. Toyota has curtailed overtime at its North American plants.
Each year Japan exports 2.5m engines and 8.5m transmissions to assembly plants in Europe, China, the Middle East, South Asia and the Americas, according to IHS Global Insight, a consultancy.
In all, about 2,200 separate part numbers make up the typical vehicle, the consultancy said.
"Production shutdowns in Japan will have a truly global effect," IHS Global Insight said.
In fact, the disruptions in Japan are affecting one chemical segment in Europe.
A nylon 6,6 compounder told ICIS that European demand has fallen by 20-30%. Polyamide 6,6 is used as an engineered plastic in automobiles.
Since several important parts come from Japan, European auto plants are decreasing operating rates.
Regarding technology, Japan accounts for 20% of world semiconductor production, including about 40% of flash-memory chips, IHS Global Insight said.
(Additional reporting by Mark Victory)
($1 = €0.70)
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