United States Petrochemicals Report Q2 2016 - New Market Study Published


Recently published research from Business Monitor International, "United States Petrochemicals Report Q2 2016", is now available at Fast Market Research


[USPRwire, Thu Apr 14 2016] The US petrochemicals market was expected to see some tightening in H116 amid plant turnarounds, but overall the year will see a softening of prices amid slower end-market growth and rising output. As a result, US petrochemicals margins are set to decline, undermining profitability and potentially prompting delays in expansion projects.

In 2016, the US petrochemicals industry is likely to witness more downside risk. The Chemical Activity Barometer (CAB) three-month moving average (3MMA), a leading economic indicator created by the American Chemistry Council (ACC), slipped 0.1% in February following flat performance in January and two months of revised gains in November and December 2015. However, the level in February was still up 1.5% y-o-y. In February, production-related indicators were mixed, reflecting some improvement in plastic resins used in packaging, as well as a downturn in certain performance chemistries related to the oil and gas sector.

Full Report Details at
- http://www.fastmr.com/prod/1151307_united_states_petrochemicals.aspx?afid=302

US petrochemicals' competitiveness is being challenged as its dominant ethane feedstock faces Asian and European rivals that are benefitting from sustained low naphtha feedstock costs. US production retains a favourable edge in the cost curve, supply chains are well integrated and feed is sufficient to fulfil the demand of new capacity. However, lower margins could lead to some projects being postponed or reconsidered.

The focus in coming months will be the planned USD120bn merger of two US chemical giants, Dow Chemical and DuPont. Both companies have failed to convince investors of long-term profitability in an increasingly competitive market. A merger of Dow and DuPont would enable the companies to align their assets, rationalise costs and operations, cut out duplication and build up their joint strengths. The merger process is likely to be protracted, with Chinese anti-trust regulators likely to be a stumbling block.

Over the medium term, the country will see capacity growth led by new ethane-fed crackers that exploit growing shale gas output, much of it coming on stream in 2017. In total, 7.34mntpa of new cracker capacity is confirmed within the next five years with proposals for over 10mntpa more cracker capacity, although some of this may not materialise.

The US should raise total ethylene capacity to 38mn tonnes per annum (mntpa) by 2018, up 8.64mntpa from 2015, with capacity growth led by new ethane-fed crackers that exploit growing shale gas output, much of it coming on stream in 2017.

Production growth in the automotive industry is set to moderate due to capacity constraints. However, growth is set to continue steadily over the medium term, thereby ensuring considerable upside for petrochemicals producers, particularly in engineering polypropylene (PP) products, polyurethane upholstery and synthetic rubbers, which are used in the manufacture of vehicles.

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