US ethane, TiO2 prices to stay high in 2012 – analyst

19 December 2011 19:16  [Source: ICIS news]

Prices should remain relatively high for US ethane and titanium dioxideHOUSTON (ICIS)--Prices should remain relatively high for US ethane and titanium dioxide (TiO2) in 2012, an analyst said on Monday.

A majority of US crackers use ethane as a feedstock to produce ethylene, which is one of the reasons why supplies are tight, according to a research note by David Begleiter, an analyst for Deutsche Bank.

He estimates that more than 80% of North American ethylene production relied on natural gas liquids as a feedstock in 2011.

In addition to demand, constrained pipelines are also keeping ethane prices high, Begleiter said. New pipeline and fractionation capacity will not be in place until late 2012 or early 2013.

As such, Begleiter expects ethane supplies to be balanced to tight when compared with demand.

Ethane supplies could loosen somewhat in the second quarter, when about 11% of North American ethylene capacity will be off line, Begleiter said.

Regardless of the expected tightness, ethane crackers should maintain their advantage against naphtha crackers, he said.

"US ethylene manufacturers should enjoy significantly lower ethylene production costs versus naphtha-based competitors in Europe and Asia through at least 2015," he wrote.

Begleiter also expects titanium ore prices to increase sharply in 2012 ­– by 80–90% in the first half for rutile ore.

Titanium ore is a feedstock for the pigment titanium dioxide (TiO2), and high ore prices helped support higher prices for the pigment.

TiO2 producers should be able to pass through the cost hikes because supply for the pigment remains tight.

For more on TiO2 or ethylene visit ICIS chemical intelligence

By: Al Greenwood
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