United States Petrochemicals Report Q4 2012
Business Monitor International, November 2012, Pages: 83
The US Petrochemicals Report examines the short-term trends in domestic consumption and production growth amid a simultaneous economic slowdown and surge in investment in capacity based on ethane from the Marcellus shale gas reserves.
This report analyses the ways in which producers are minimising investment risk and also explores the impact of the increasingly precarious external macroeconomic environment on the US consumer and on the ability of producers and exporters alike to realise returns in the short-term. The report also assesses the growth and risk management strategies being employed by the leading players in the US petrochemicals industry as they seek to maximise the tremendous growth opportunities offered by the local market and leverage their competitive edge over European producers.
Following modest growth at start to the year, the petrochemicals sector is facing increased volatility and uncertainty threatens production growth. The American Chemistry Council (ACC) reported that its recently launched Chemical Activity Barometer (CAB) showed growth of 1.1% y-o-y and 0.4% m-o-m in August. However, BMI is not convinced this growth will be sustained throughout 2012 and into 2013 as those market segments reporting growth are likely to be offset by contractions elsewhere. Notably, the US export sector is likely to face increasing headwinds from abroad, centred around reduced European demand amid a eurozone recession and potential for dollar strength.
By 2016, ethylene production capacity should have exceeded 30mn tonnes per annum (tpa), an increase of around 12% over 2011 levels. Expansion is set to continue throughout the forecast period, particularly in downstream polymers as well as olefins. As such, US ethylene production could reach new records in coming years, provided the Marcellus Basin fulfils its the much-vaunted growth in ethane feed as predicted.
Over the last quarter BMI has revised the following views:
- BMI has revised down its forecast in chemicals output growth from 2.5% to 1.5% in 2012. The main concern will be the extent to which the eurozone crisis impacts on the US economy,
although 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.
- While the automotive and construction sectors may provide a modest fillip to polypropylene
(PP), synthetic rubber and PVC segments, or at least stem their decline, BMI thinks it unlikely that this will be enough to offset declines elsewhere and as such expects a modest contraction in both petrochemicals consumption and production.
- The US scores 90.1 points in BMI’s Americas Regional Petrochemicals Risk/Reward Ratings
(RRRs), 12.4 points ahead of Canada. The score is unchanged since the previous quarter after a period of improvement as a result of new ethylene projects as well as the improved market risk scenario, both directly related to the competitive ethane feedstock opportunities provided by the Marcellus shale deposits.
In the first four months of 2012, US chemicals output grew just 0.5% year-on-year (y-o-y), with the threemonth moving average for March and April seeing declines of 0.4% and 0.3% respectively, according to figures provided by the American Chemistry Council (ACC). Despite the slowdown in 2012, investment in capacity is accelerating as US natural gas prices have become affordable and relatively stable. In stark contrast to the EU, the US is seeing a resurgence in petrochemicals expansion, having held on to almost all the capacity it possessed before the 2008 financial crisis. Key to this is the Marcellus shale deposits,
which have improved the cost position of US petrochemicals.
BMI Industry View 5
SWOT Analysis 7
US Political SWOT 7
US Economic SWOT 8
US Business Environment SWOT 9
Global Petrochemicals Overview 10
Petrochemicals Market Overview 10
Table: World Ethylene Production By Country, 2011 And 2016 (‘000 tonnes capacity) 10
Financial Results 14
Table: Financial Results – Major Petrochemicals Companies, 2011 14
Global Oil Products Price Outlook 15
Table: BMI Oil Price Forecasts, 2011-2016 15
US Market Overview 22
Competitive Landscape 23
Upstream 23
Olefins 24
Table: Olefins Production Capacity (‘000tpa) 24
Aromatics 27
Table: Aromatics And Derivatives Capacity (‘000tpa) 28
Mixed Xylenes 29
Table: Xylenes Capacity (‘000tpa) 29
Polyethylene (PE) 30
Table: US Polyethylene Manufacturing And Applications 30
Table: PE Chain Capacity, (‘000tpa) 31
High-Density Polyethylene (HDPE) 31
Low-Density Polyethylene (LDPE) 32
Linear Low-Density Polyethylene (LLDPE) 33
Polypropylene (PP) 33
Table: US PP Capacity (‘000tpa) 35
Polyvinyl Chloride (PVC) 36
Table: PVC Chain Capacity, (‘000tpa) 36
Polystyrene (PS) 37
Table: PS Chain Capacity, (‘000tpa) 37
Polyethylene Terephthalate (PET) 38
Table: US Petrochemicals Sector – PET Chain Capacity (‘000tpa) 38
Industry Trends And Developments 40
Upstream 40
Cracker developments 40
Polymers and intermediates 41
Government Policy And Regulations 42
Collapse Of The PIC-Dow Merger 43
Industry Forecast Scenario 44
Petrochemicals Forecasts 44
Table: US Petrochemicals Industry, 2008-2016 46
Risk/Reward Ratings 47
Petrochemicals Business Environment 47
Macroeconomic Outlook 49
Fiscal Cliff Is The Biggest Risk 49
Table: United States – GDP By Expenditure, Real Growth %, 2008-2016 52
Company Profiles 53
BP 53
Chevron Phillips Chemical Company 55
Dow Chemical 57
ExxonMobil 60
Huntsman 62
Ineos 64
LyondellBasell 65
Occidental Chemical 67
Shell Chemicals 69
Westlake Chemical 70
Appendix: BP 72
United States Demographic Outlook 73
Table: The United States' Population By Age Group, 1990-2020 ('000) 74
Table: The United States' Population By Age Group, 1990-2020 (% of total) 75
Table: The United States' Key Population Ratios, 1990-2020 76
Table: The United States' Rural And Urban Population, 1990-2020 76
Glossary Of Terms 77
Table: Glossary Of Petrochemicals Terms 77
BMI Methodology 78
How We Generate Our Industry Forecasts 78
Chemicals and Petrochemicals Industry 78
Cross Checks 79
Business Environment Ratings 80
Table: Petrochemicals Business Environment Indicators And Rationale 81
Weighting 81
Table: Weighting Of Indicators 82
BP
Chevron Phillips Chemical Company
Dow Chemical
ExxonMobil
Huntsman
Ineos
LyondellBasell
Occidental Chemical
Shell Chemicals
Westlake Chemical
Appendix: BP
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