Fast Market Research recommends "United States Petrochemicals Report Q4 2013" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 11/13/2013 -- The main concern for the US petrochemical industry is the extent to which the eurozone crisis continues to affect the country's economy. BMI believes 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.
In H113, US ethylene results improved on those seen in H212 and maintained output above an average of over 24mn tonnes per annum (tpa). Capacity seen in Q213 was lower than that seen in Q113 due to a heavy turnaround schedule, which brought 8% of national capacity offline; however, producers were able to maintain overall supply, due largely by preparing for any anticipated shortfall during turnarounds. This also helped stabilise prices, as well as ensuring adequate supply to downstream PE production.
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BMI believes that ethylene capacity utilisation should average 87% in H213, with output returning to Q113 norms, which would represent the highest level of output since 2007. Demand for ethane is set to soar in H213 as intensive cracker turnarounds come to an end and North American producers expand their ethane processing capability. This could both raise feedstock prices and potentially create a glut in ethylene supply, squeezing margins. Gas prices will need to remain low compared to oil and demand remains adequate to absorb increased supply. During 2013, US ethylene producers are scheduled to complete four incremental expansions and restart one production train, which should increase production capacity by at least 800,000tpa.
The American Chemistry Council (ACC) reported that its Chemical Activity Barometer (CAB) three-month moving average index registered growth of 3.8% year-on-year (y-o-y) and 0.1% month-on-month (m-o-m) in August 2013, following a clear upward trend since mid-2012.
In volume terms, US production of major plastic resins totalled 44.5bn pounds in the first seven months of 2013, representing a 1.5% y-o-y increase. This is at the lower end of BMI's forecast range of 1.5-2.0%. Sales and captive (internal) use of major plastic resins totalled 44.1bn pounds over the period, representing a 0.7% y-o-y increase.
Over the last quarter, BMI has revised the following views:
- BMI's view that the industry is in a good position to continue its recovery in 2013 is playing out, following estimated light vehicle sales growth of 13.8% in 2012
- We maintain that the core components of the US economy are on the cusp of a cyclical upswing that could drive petrochemicals growth over the coming quarters. We believe the risks to our 2014 forecast of 2.7% real GDP growth - a shade below the Manufacturers Alliance for Productivity and Innovation's (MAPI) 2.8% forecast - are predominantly to the upside.
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