APLA ’12: US chems recovery to depend on capital investments, not demand

12 November 2012 15:06  [Source: ICIS news]

RIO DE JANEIRO (ICIS)--The next upswing in the US chemical profit cycle will be based on capital investments, not demand growth, an industry consultant said on Monday.

“Profit levels will vary by region. North America will attract more investment capital as gas based producers maximise cash margins,” IHS chemical analyst Mark Eramo said during a presentation at the Latin American Petrochemical Association (APLA) annual meeting.

Profitability will begin to deepen around 2015 to 2016 and the recovery may peak in 2016 to 2018, Eramo added.

US ethylene capacity could increase by nearly 50% in the next few years if all the expansions and new cracker projects that have been announced come to fruition, according to Eramo.

North America chemical producers have initiated plans to invest $20bn (€15.8bn) in news assets and infrastructure.

With oversupply and muted domestic demand a potential risk to investments, new investments will depend on the export market, a market participant said on the sidelines of the APLA meeting.

The APLA conference ends on Tuesday.

($1 = €0.79)

By: Heather McGuire Doyle
+1 713 525 2653

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