Recently Released Market Study: United States Petrochemicals Report Q4 2012

New Energy market report from Business Monitor International: "United States Petrochemicals Report Q4 2012"


Boston, MA -- (SBWire) -- 12/31/2012 --The US Petrochemicals Report examines the short-term trends in domestic consumption and production growth amid a simultaneous economic slowdown and surge in investment in capacity based on ethane from the Marcellus shale gas reserves.

This report analyses the ways in which producers are minimising investment risk and also explores the impact of the increasingly precarious external macroeconomic environment on the US consumer and on the ability of producers and exporters alike to realise returns in the short-term. The report also assesses the growth and risk management strategies being employed by the leading players in the US petrochemicals industry as they seek to maximise the tremendous growth opportunities offered by the local market and leverage their competitive edge over European producers.

Following modest growth at start to the year, the petrochemicals sector is facing increased volatility and uncertainty threatens production growth. The American Chemistry Council (ACC) reported that its recently launched Chemical Activity Barometer (CAB) showed growth of 1.1% y-o-y and 0.4% m-o-m in August. However, BMI is not convinced this growth will be sustained throughout 2012 and into 2013 as those market segments reporting growth are likely to be offset by contractions elsewhere. Notably, the US export sector is likely to face increasing headwinds from abroad, centred around reduced European demand amid a eurozone recession and potential for dollar strength.

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By 2016, ethylene production capacity should have exceeded 30mn tonnes per annum (tpa), an increase of around 12% over 2011 levels. Expansion is set to continue throughout the forecast period, particularly in downstream polymers as well as olefins. As such, US ethylene production could reach new records in coming years, provided the Marcellus Basin fulfils its the much-vaunted growth in ethane feed as predicted.

Over the last quarter BMI has revised the following views:

- BMI has revised down its forecast in chemicals output growth from 2.5% to 1.5% in 2012. The main concern will be the extent to which the eurozone crisis impacts on the US economy, although US producers will be able to leverage their competitive advantages both in terms of access to a growing manufacturing sector and their integration with low-cost ethane feedstock that is lacking in Europe.
- While the automotive and construction sectors may provide a modest fillip to polypropylene (PP), synthetic rubber and PVC segments, or at least stem their decline, BMI thinks it unlikely that this will be enough to offset declines elsewhere and as such expects a modest contraction in both petrochemicals consumption and production.

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