30 August 2013 13:49 [Source: ICIS news]
LONDON (ICIS)--Chemicals margins year on year contracted in the EU in June on the back of price falls, and in the US in July as a result of cost increases, US-based analyst Bernstein Research said on Friday.
July US chemicals gross margins fell despite stable pricing, as a result of a 3% increase in costs, while June European gross margins fell on the back of prices decreasing more than costs.
Gross margins were stable month on month in Europe during June, but fell by 50 basis points in the US, Bernstein added.
Prices increased in China and India, while the August naphtha crack spread – the profit margin for naphtha against the price of crude oil – indicates a growing demand for petrochemicals in Asia. Meanwhile, the spreads for base petrochemicals ethylene, propylene, butadiene and benzene started to stabilise or recover, the company said.
Specialty chemicals margins in Europe and the US continued to outperform those for commodity chemicals, with specialties pricing stable month on month in both regions for June-July. Pricing was stable year on year in Europe and contracted by 1% in the US.
Commodity chemicals prices, month on month, were stable in the EU but fell by 1.4% in the US, with year-on-year margin declines recorded for both regions.
“Companies in our coverage we currently favour are in segments that can hold prices in the deflationary cost environment or have defensive characteristics,“ added Bernstein.
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