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26 March 2010
Chemical Monthly -- March 2010
Prices And Margins Grinding Higher, 1H2010 Outlook Improved: Most
commodity chemical prices are grinding higher as a result of tight supply driven
by monomer production issues. We believe the large impact from ethylene
outages across the USGC will drive price, despite availability of NGLs and
Commodity Producers Benefit: We expect the base chemicals, plastics and
inorganic chemical prices to grind higher which should bode well for producers
especially companies that are fully integrated, i.e. DOW, which consumes all of
it’s base chemicals for it’s downstream businesses.
Specialty Chemical Companies Squeezed in the near-term: Specialty
chemical producers may be playing catch up as raw material inflation continues,
particularly those tied to propylene, ethylene and their derivatives which are
likely to move higher over the next few months.
Ethylene – February ethylene contract prices rose 3.5cents/lb, while cash
costs declined almost 2 cents/lb. Margins are vey high across all feedstock’s
with the weighted average margin at roughly 17 cents in February, pushing
20 plus cents in March.
Pricing is extremely strong for ethylene despite cash costs coming in. Pricing
is primarily being driven by the tigh