US Chemical Output Cuts Reduce Only Some Q1 Inventories
HOUSTON (ICIS news)--Dramatic cutbacks in US chemical production since the third quarter of 2008 have only partly offset declining demand, with some sectors still building inventories in the first quarter, according to industry data issued on Thursday.
The first-quarter data compiled by the National Petrochemical & Refiners Association (NPRA) is based on voluntary reports from chemical companies, and the industry association does not include data if the reporting pool is too small to preserve anonymity.
The most significant gap between production and inventories appears to be in benzene, with output down 11% from the fourth quarter to an estimated 301.6m gal (1.14bn litres) – continuing a trend that has been evident since the start of 2008.
Despite the steady drop in supply, the data – based on input from 29 companies – showed US benzene stocks swelled to 136.3m gal in the first quarter, up 21% from the fourth quarter and the highest total in more than two years.
The build-up in benzene inventories also occurred despite some recovery in downstream aromatics production.
Styrene output rose to 2.035bn lb (923,000 tonnes) in the first quarter, up 12% from a low point of 1.821bn lb in the fourth quarter. Styrene production in the latest quarter was still running 29% below year-earlier levels, though.
Paraxylene (PX) also showed up as a brighter spot for chemical producers.
The NPRA did not include running tallies on production, but the data showed inventories were at 422.6m lb at the end of the first quarter, down by 21% from 535.4m lb in the fourth quarter and down 44% from 750.6m lb a year earlier.
US PX demand slumped in late 2008, but has since recovered in part due to rising demand in Asia, where prices have hit a nine-month high.
Improved Asian demand also appeared to be a factor in a bounce in US monoethylene glycol (MEG) production.
MEG output in the first quarter was 725m lb, up 7.4% from 675m lb in the fourth quarter but still down 41% from 1.230bn lb a year earlier, NPRA said.
In olefins, the picture was mixed, with ethylene production picking up after a steep fall over the previous two quarters, while propylene and butadiene (BD) output continued to slide.
US ethylene producers had shut several crackers in the fourth quarter and reduced operating rates as demand plunged.
But the advantage of cheaper natural gas-based feedstocks helped improve margins sufficiently to get some crackers restarted.
US natural gas prices have hit seven-year lows this year as the economic downturn sharply reduced industrial demand, tilting producers further toward lighter feedstocks.
Ethylene production in January-March was 10.91bn lb, up by 2% compared with 10.70bn lb in the fourth quarter. But output was still down by 19% from 13.53bn lb one year earlier, according to the NPRA figures.
US crackers were estimated to have run at an average operating rate of around 70% in the first quarter, up from 68% in the fourth quarter but down from an estimated 85% in the same period of 2008.
Output of propylene was 7.22bn lb, down by 7.4% from 7.80 lb in the fourth quarter and down 17% from 8.67bn lb one year earlier.
BD production in the first quarter was 634m lb, down 21% from 806m lb in the fourth quarter and down 38% from 1.03bn lb a year earlier.
The data showed that the production cutbacks in olefins in the fourth quarter had succeeded in reducing first-quarter inventories.
US ethylene inventories were at 771m lb, down by 29% from the fourth quarter, but still up by 0.3% from a year earlier.
Propylene stocks fell to 1.57bn lb, down by 15% from the fourth quarter, but up by 31% from a year before.
BD inventories were 182m lb, down by 26% from the fourth quarter but up by 32% year on year.
The first-quarter data compiled by the National Petrochemical & Refiners Association (NPRA) is based on voluntary reports from chemical companies, and the industry association does not include data if the reporting pool is too small to preserve anonymity.
The most significant gap between production and inventories appears to be in benzene, with output down 11% from the fourth quarter to an estimated 301.6m gal (1.14bn litres) – continuing a trend that has been evident since the start of 2008.
Despite the steady drop in supply, the data – based on input from 29 companies – showed US benzene stocks swelled to 136.3m gal in the first quarter, up 21% from the fourth quarter and the highest total in more than two years.
The build-up in benzene inventories also occurred despite some recovery in downstream aromatics production.
Styrene output rose to 2.035bn lb (923,000 tonnes) in the first quarter, up 12% from a low point of 1.821bn lb in the fourth quarter. Styrene production in the latest quarter was still running 29% below year-earlier levels, though.
Paraxylene (PX) also showed up as a brighter spot for chemical producers.
The NPRA did not include running tallies on production, but the data showed inventories were at 422.6m lb at the end of the first quarter, down by 21% from 535.4m lb in the fourth quarter and down 44% from 750.6m lb a year earlier.
US PX demand slumped in late 2008, but has since recovered in part due to rising demand in Asia, where prices have hit a nine-month high.
Improved Asian demand also appeared to be a factor in a bounce in US monoethylene glycol (MEG) production.
MEG output in the first quarter was 725m lb, up 7.4% from 675m lb in the fourth quarter but still down 41% from 1.230bn lb a year earlier, NPRA said.
In olefins, the picture was mixed, with ethylene production picking up after a steep fall over the previous two quarters, while propylene and butadiene (BD) output continued to slide.
US ethylene producers had shut several crackers in the fourth quarter and reduced operating rates as demand plunged.
But the advantage of cheaper natural gas-based feedstocks helped improve margins sufficiently to get some crackers restarted.
US natural gas prices have hit seven-year lows this year as the economic downturn sharply reduced industrial demand, tilting producers further toward lighter feedstocks.
Ethylene production in January-March was 10.91bn lb, up by 2% compared with 10.70bn lb in the fourth quarter. But output was still down by 19% from 13.53bn lb one year earlier, according to the NPRA figures.
US crackers were estimated to have run at an average operating rate of around 70% in the first quarter, up from 68% in the fourth quarter but down from an estimated 85% in the same period of 2008.
Output of propylene was 7.22bn lb, down by 7.4% from 7.80 lb in the fourth quarter and down 17% from 8.67bn lb one year earlier.
BD production in the first quarter was 634m lb, down 21% from 806m lb in the fourth quarter and down 38% from 1.03bn lb a year earlier.
The data showed that the production cutbacks in olefins in the fourth quarter had succeeded in reducing first-quarter inventories.
US ethylene inventories were at 771m lb, down by 29% from the fourth quarter, but still up by 0.3% from a year earlier.
Propylene stocks fell to 1.57bn lb, down by 15% from the fourth quarter, but up by 31% from a year before.
BD inventories were 182m lb, down by 26% from the fourth quarter but up by 32% year on year.
quoted from: www.ICIS.com
