A recently completed annual review of the global ethylene market suggests that companies in the industry would have firm margins in 2006 and 2007.
Nova Chemicals that was spun off from Calgary-based Nova Corp. in the late 1990's, makes raw materials such as ethylene and polyethylene. Nova will continue to benefit from a cyclical peak in demand for chemicals in North America. Nova is highly leveraged to the ethylene and polyethylene chain with each cent rise in margins driving per share earnings by 49 cents. It is forecasted that Nova's share profit will peak in 2006 at US$6.75, although ethylene prices will stay soft in the near future.
It is believed that the recent weakness in the ethylene chain profitability will reverse in the second half of the year and the current depressed price will be seen as a buying opportunity.
23-May-05 
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