US housing gains, export sales help drive petchems, Fed says

29 August 2012 22:34  [Source: ICIS news]

WASHINGTON (ICIS)--Gradual improvements in the housing sector and continued export sales are driving US petrochemicals, the Federal Reserve Board said on Wednesday, with caustic soda exports holding strong and chlorine demand rising.

In its periodic "Beige Book" economic analysis, the Federal Reserve – the US central bank – said that “Petrochemicals producers reported steady demand in July and early August,” the six-week period covered by the analysis.

“Demand for PVC [polyvinyl chloride], tied to residential construction, improved domestically, and exports continued to be a major source of sales” for petrochemicals, the Beige Book analysis said.

“Exports of caustic soda remained strong as US prices are very competitive due to lower electricity costs,” the report noted, while chlorine demand edged up.

The report said that demand for propylene weakened during the period, but the central bank offered no explanation.

Gulf Coast refiners said operating rates remained high at 90%,” the analysis related.

“Robust export demand for gasoline and distillates kept inventories low, and refiners’ margins remained healthy,” the report added.

The Fed also said that housing activity in the US southwest was gaining strength, noting that “sales of new and existing homes continued at a good pace and were well above expectations” and the outlook for industrial real estate was optimistic but cautious.

Overall, however, the Fed analysis noted that worries about European sovereign debt issues and the coming US national elections have created uncertainty for US businesses.

Most companies that responded to the Fed’s questions about current conditions “noted that increased uncertainty will likely be a drag on demand through year-end”.

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

By: Joe Kamalick
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