Everyone is talking about it, the US subprime crisis and the recession that is coming in 2008. The recession means less demand and US petchem industry is likely to suffer and be dependent totally on export.
The US housing market seems to have a high bearing on the economy and most business and economic analysts are in tandem with a conclusion that there will be a recession at least in the US in 2008 and this includes the chief of the American Chemistry Council (ACC).
Since end users of petrochemical products include those of housing and construction where most
downstream chemicals products such as adhesives, insulation, synthetics, PVCs, paints and coatings, roofing and other materials are consumed, the impact could be significant on the petchem outlook for the US.
It was estimated that an average house in the US consume $15000 of chemicals and there has yet to be any sign of the end of the bearish scenario.
However, the scenario is quite different with the export markets with countries elsewhere are seeing booming in the petrochemical sector especially when the dollar is weak against all major currencies.
In fact, major market analysts such as Nexant has indicated that the US polyolefins plant margin is likely to be on the high side in 2008. The operating rates are going to be high with better margins. With tight polypropylene (PP) market outlook for US in 2008, there will be a boost of demand for export polystyrene.
Bauman maintained Nexant's outlook for PS because the US now has fewer producers due to joint ventures, which should create more pricing discipline. INEOS NOVA has already reduced their polystyrene capacity which could further increase price hike for high demand polystyrene.
However, one chemical product that gets unlucky for 2008 would be polyethylene terephthalate (PET) since overcapacity is forecasted, reducing plant production margin and lower price.
The US housing market seems to have a high bearing on the economy and most business and economic analysts are in tandem with a conclusion that there will be a recession at least in the US in 2008 and this includes the chief of the American Chemistry Council (ACC).
Since end users of petrochemical products include those of housing and construction where most
downstream chemicals products such as adhesives, insulation, synthetics, PVCs, paints and coatings, roofing and other materials are consumed, the impact could be significant on the petchem outlook for the US.
It was estimated that an average house in the US consume $15000 of chemicals and there has yet to be any sign of the end of the bearish scenario.
However, the scenario is quite different with the export markets with countries elsewhere are seeing booming in the petrochemical sector especially when the dollar is weak against all major currencies.
In fact, major market analysts such as Nexant has indicated that the US polyolefins plant margin is likely to be on the high side in 2008. The operating rates are going to be high with better margins. With tight polypropylene (PP) market outlook for US in 2008, there will be a boost of demand for export polystyrene.
Bauman maintained Nexant's outlook for PS because the US now has fewer producers due to joint ventures, which should create more pricing discipline. INEOS NOVA has already reduced their polystyrene capacity which could further increase price hike for high demand polystyrene.
However, one chemical product that gets unlucky for 2008 would be polyethylene terephthalate (PET) since overcapacity is forecasted, reducing plant production margin and lower price.
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