11 April 2012 22:44 [Source: ICIS news]
HOUSTON (ICIS)--The pass-through of higher ethylene prices in March weakened export demand for US Gulf coast petrochemical products, including polyethylene (PE), according to a monthly economy report released on Wednesday by the Federal Reserve.
The Fed’s “Beige Book” for March includes comments from a region that includes much of the Texas and Louisiana Gulf coast.
“Petrochemicals producers said planned maintenance outages have tightened capacity, constrained production and raised the price of ethylene,” the report said. “Capacity was reduced by closures during the recession, and new modern plants will not be on line for several years.”
The report continued, “The pass-through of higher ethylene prices has weakened export demand for petrochemical products including polyethylene. Gulf coast refiners noted steady margins overall since the last report.”
Several producers, including Dow Chemical, BASF, INEOS, DuPont and Chevron Phillips Chemical, have scheduled US cracker turnarounds this spring.
US ethylene contracts for March were settled at 55.75 cents/lb ($1,229/tonne, €934/tonne), up by 1.75 cents/lb from February.
On the energy front, the report said capacity utilisation rates for west coast refiners continued to hold largely stable, as weak domestic gasoline demand was offset by strong foreign demand for distillate products. “In Dallas, Gulf coast refiners noted steady margins overall.”
Manufacturing continued to expand in most regions, the Fed report said, with gains noted in automotive and high-technology industries. Manufacturers in many regions expressed optimism about near-term growth prospects, but they were “somewhat concerned about rising petroleum prices”, according to the report.
($1 = €0.76)
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