US demand for petrochemicals estimated to slowdown in 2007

19-Jan-07

American plastics processors are expected to use their stockpiles and begin buying again. However, overall demand for petrochemicals will depend mainly on overall economic conditions. Factors like the recent slowdown of U.S. economic activity, falling real estate sales, inflation and rising interest rates have been affecting US economy. These factors exert pressure on consumption and consequently on demand, indicating that may have lower prices and margins. Demand for ethylene and polyethylene is expected to be slower in 2007 when compared to 2006. However, the year will continue to be a profitable one for producers, as they adopt cost cutting strategies. Processors are expected to replenish inventories in early 2007. However, in the event of a continuing downtrend in energy, in all likelihood, the processors will buy only what they need. If they see stable or rising energy prices they will buy more to ward off higher prices later. U.S. basic chemicals production is expected to show a modest 2% growth through 2007 before rebounding to 6% expansion in 2008. Experts estimate that US petrochemical supply will be strong until 2009.