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Natural Gas Prices Keep The Heat On North American Chemicals Industry Mar 06
Standard & Poors, March 2006
Abstract
During the fourth quarter of 2005, many North American chemical companies faced intensified short-term margin pressure from the rapid escalation of natural gas prices. Spot prices have since retreated from the historical highs near $15 mmBtu reached in the weeks following the Gulf Coast hurricanes, but natural gas contracts are still trading at lofty levels near $7 mmBtu versus prices in a range of $1.5 mmBtu-$3.0 mmBtu for most of the 1990s. While aggressive pricing by chemical producers has offset most of the short-term challenges of higher costs, the potential for sustained high natural gas prices has meaningful longer-term implications for the chemicals industry. Natural gas, and in particular, ethane gas, is a key input in the production of building...
Companies mentioned in this report are: Air Products and Chemicals Inc.,The Dow Chemical Co.,Lyondell Chemical Co.,Georgia Gulf Corp.,Praxair Inc.,RPM International Inc.,Eastman Chemical Co.,NOVA Chemicals Corp.,Westlake Chemical Corp.,Airgas Inc.,Celanese AG ,Huntsman Corp.,Chevron Phillips Chemical Co. LLC,Albemarle Corp.,Nalco Co.
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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