Holiday demand for electronics may boost US chemical industry

22 November 2011 21:28  [Source: ICIS news]

Stronger demand for electronics during the holiday shopping season should bode well for the US chemical industry, an analyst said on Tuesday. HOUSTON (ICIS)--Stronger demand for electronics during the holiday shopping season should bode well for the US chemical industry, an analyst said on Tuesday.

According to the National Retail Federation, 32% of consumers plan to buy electronics this year, the highest level since 2008, when the number was 30%. Last year, only 28% planned to buy electronics.

Chemicals are a key component in electronics.

For example, chemicals make up about 33% of the value of inputs used to make semiconductors, which are widely used in cell phones, computers and MP3 players,  the American Chemistry Council (ACC) said.

Additionally, chemicals make up 38% of the value of inputs used to make CDs and DVDs.

“Demand for electronics is pretty strong,” said Stephen Baker, the vice president of industry analysis for The NPD Group, a US consumer research firm. “People want their tech products.”

Baker said cell phones have been the top item for the past few years, followed by televisions and computers.

Analysts say those items will once again be on shoppers’ wish lists, especially on the day after the US Thanksgiving holiday, traditionally called Black Friday.

Retailers usually hold sales, offering deep discounts on several items on that day.

The Monday following Thanksgiving, referred to as Cyber Monday, has become the Internet’s equivalent to Black Friday.

However, several buyers and sellers in the polymers and resins markets said that although demand is healthier year on year, it is well below the peak demand seen before the recession of 2008.

“We haven’t seen the typical ramp-up in production of consumer electronics here or in Asia,” a polycarbonate (PC) producer said.

Players in the US methyl methacrylate (MMA) market said that demand for MMA for use in flat-screen TV and tablet production peaked at the end of the second quarter in 2011, rather than in the third quarter.

The third quarter is when the build-up for the US winter holiday season typically occurs.

“The LED/LCD market has slowed down, and most buyers are working through their inventories,” an MMA producer said.

In regards to coatings for consumer electronics, players in the epoxy resins market said demand in Asia has dwindled.

This has led to Asian exporters looking to unload material in the US at lower prices, which has pushed down US prices on domestic epoxy resins material by 21 cents/lb since the start of October.

Additional reporting by John Dietrich

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Bobbie Clark
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