Price and market trends: Trucks, new models propel strong demand for automotive petchems

17 May 2013 09:51  [Source: ICB]

GM said April sales of pickups were up by 23% year over year, while Ford and Chrysler had double-digit increases

Normally, May is when petrochemical producers start to see orders from the auto sector tail off, mainly because many US auto plants shut down for six weeks or more during the summer. But that's not happening this year, sources said on 9 May.

 

 Petrochemical demand is strong as pick-up sales increase

Copyright: RexFeatures

Thanks to robust US auto sales and a slew of new product offerings, automotive demand for petrochemicals such as acrylonitrile-butadiene-styrene (ABS) and nylon remains strong, and industry sources do not see it waning anytime soon.

"This year is different," said a seller of ABS to auto parts makers.

A nylon producer said: "Automotive production remains strong with the forecast at 15.9m units for 2013. Weekly production remains strong with indications of increased demand. There has been no indication regarding the normal summer slump this year."

Another ABS source said: "New projects are launching, and platforms that launched late last year are now ramping up. Auto demand is very good for the Americas, and pricing is solid."

Only one source said it was not seeing better orders than expected for the next few months.

EXCEPTION TO THE RULE
"We are still forecasting the typical business cycle of shutdowns in July and August for auto business," said one nylon source. "If this doesn't happen, then it's an upside to our forecasts."

The forecast for US auto sales of 15.9m light cars and trucks in 2013 may be a little optimistic, as most forecasts are in the 15.5m range. In April, US auto sales were 14.9m annual units, the first time the monthly average has dipped below the 15m unit mark in five months. That is still a healthy pace from the doldrums of 2009 and auto sales below 10m units a year.

Full-size pick-up trucks were a particularly strong segment in April, and one reason for strong petrochemical demand from the auto industry. GM reported that April sales of pick-ups were up by 23% year over year, while sales of Ford's best-selling F-150 pick-up jumped by 24% and Chrysler sold 49% more Dodge Ram pick-ups than it did a year ago.

As a result of strong sales, Ford said it will add about 2,000 jobs at its Kansas City, Missouri, truck plant. Chrysler, too, will add a third shift at its Warren, Michigan, truck plant. GM's truck plants all operate three shifts, and last year the Detroit auto maker announced a third shift to come at its Arlington, Texas sport-utility vehicle plant.

LAUNCHES LINE UP
New product launches are also boosting petrochemical demand. Chrysler is completing the launch of the refreshed 2014 Jeep Grand Cherokee and the 2013 Ram Heavy Duty pick-up truck. Chrysler is also ramping up for the launch of the 2014 Dodge Durango.

Over at GM, ramp-up for new versions of the Chevrolet Camaro Z28, Cruze Clean Turbo Diesel, Impala and the Silverado pick-up could keep demand for plastics above normal levels through summer and into the third quarter.


Author: Mark Yost



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