Feedstocks turn more favourable for US chemicals – analyst

11 January 2012 19:34  [Source: ICIS news]

NEW YORK (ICIS)--Price trends for global oil and US natural gas are leading to an increasingly favourable environment for US chemical producers, a Wall Street analyst said on Wednesday.

Since the beginning of the year, there has been a sharp decline in US ethane and propane prices, along with falling US natural gas prices, and a continuing rise in global oil and naphtha prices, noted Charles Neivert, analyst with US-based investment bank Dahlman Rose, in a research note.

“This situation has rapidly widened the US margins for ethylene and is forcing the price of chemical products up in other parts of the world,” said Neivert.

“This is a near ideal situation for US producers, global prices being forced up by oil and local costs declining with lower raw material price. The margin grows from both sides,” he added.

As this has strengthened the global competitive position of US producers, chemical exports could be invigorated, he noted.

A number of turnarounds for US ethylene crackers in the first half of 2012 will also contribute to a tighter market and firmer pricing.

“We expect further upward price movement, especially in ethylene derivatives, to come after the Chinese New Year,” Neivert said.

The Lunar New Year is at the end of January.

US chemical producers that would benefit include LyondellBasell, Methanex and Georgia Gulf, as well as Westlake Chemical and Dow Chemical, he said.

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

By: Joseph Chang
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