US petchem price run-up may destroy demand – analyst

12 March 2012 21:06  [Source: ICIS news]

HOUSTON (ICIS)--The sharp increase in prices for several chemicals during the first two months of 2012 could destroy demand, an analyst said on Monday.

"We are increasingly asked whether commodity and energy prices could prompt demand destruction in certain end markets, rather than simply spurring a restocking cycle ahead of the price increases," said Laurence Alexander, an analyst at Jefferies.

A pattern has now emerged where producers are only partially implementing price increases despite persistent pressure from feedstocks, Alexander said.

Titanium dioxide (TiO2) was one of the first chemicals to demonstrate what Alexander called price fatigue, with producers implementing a 10 cent/lb ($220/tonne, €167/tonne) increase during the first quarter on their initial 15-20 cent/lb target, he said.

For butadiene (BD), sharp increases were not fully passed through to customers of styrene butadiene rubber (SBR), he said.

Polypropylene (PP) is having difficulty passing through higher propylene prices, Alexander said. Downstream nitriles customers are having difficulty maintaining margins because of rising prices for acrylonitrile (ACN).

($1 = €0.76)

By: Al Greenwood
+1 713 525 2645

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