US Fed sees drop in Aug petchem production in key Dallas district

16 October 2013 20:13  [Source: ICIS news]

HOUSTON (ICIS)--Petrochemical companies in the key Dallas district noted a drop in production during August, the Federal Reserve (Fed) said on Wednesday.

The Dallas district includes all of Texas and the northern part of Louisiana.

While August production dropped, year-to-date production remained slightly above levels from the same time in 2012, the Fed said in its Beige Book.

The Beige Book is a summary of economic activity among the 12 Federal Reserve districts.

US petrochemical producers have maintained their cost advantage derived from using natural-gas based feedstock, the Fed said. Much of the world uses more expensive oil-based naphtha instead.

The Federal Reserve said weakening global demand and unplanned outages had suppressed exports.

Energy production in the Dallas district changed little from the high levels from the last reporting period, the Fed said. Margins had tightened, although global demand held steady.

For the US as a whole, oil and gas activity also remained high in the Cleveland district, which includes part of the Marcellus shale, the Fed said.

Activity expanded in the Richmond district, which also includes part of the Marcellus, as well as the Minneapolis district, which includes the Bakken formation.

Drilling rigs had shifted from oil to natural-gas drilling in Richmond and Kansas City districts, which includes the energy producing states of Wyoming and Colorado, the Fed said. The shift reflected expectations that natural gas prices could rise while oil prices could fall.

Overall, the US economy continued to expand at a modest to moderate pace. In general, sentiment was optimistic about future growth, but concerns have risen over uncertainty caused mostly by the government shutdown and the debt-ceiling debate.

Meanwhile, consumer and business spending increased in most districts.

Residential construction continued to increase at a moderate pace, while that for nonresidential expanded at a slower pace, the Fed said.

By: Al Greenwood
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