Fitch: Solid Profitability, Some Consolidation Ahead for Global Chemical Industry in 2008.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. expects that full-year profitability for most petrochemicals producers will be healthy and near a mid-cycle level over the coming year. During the first half of 2008, chemical producers are likely to be focused on increasing average selling prices for most products that are currently under severe cost pressure from escalating crude oil and products derived thereof. Most producers will attempt to restore profitability or regain loss/profit margin as quickly as possible, if not by the end of first quarter 2008 (Q1 2008). Fitch expects that exports are likely to keep pace with 2007 levels as the weaker U.S. dollar and ethylene economics based on ethane ethane (ĕth`ān), CH3CH3, gaseous hydrocarbon. It is a continuous-chain alkane. As a constituent of natural gas, it is used for fuel. It can be prepared by cracking and fractional distillation of petroleum. provide for greater opportunities in light of higher crude oil prices. Furthermore, U.S. producers should continue to benefit at least temporarily from the favorable export position, as more operational issues at new facilities and additional plant start-ups are delayed overseas. The global chemical industry continues to face several operating and macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. challenges, including volatile and escalating commodity costs. The weakened U.S. dollar has squeezed the profitability of North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. companies worse than their European counterparts, although a weaker dollar has also benefited North American producers as higher exports have helped maintain operating rates and kept inventories lean. The effect of higher crude oil prices will be seen in Q4 earnings results, and oil price volatility will remain a major challenge as 2008 begins. Issuer credit ratings will remain appropriate for their respective ratings category despite some industry-wide credit deterioration in 2008. Further consolidation is also expected as companies seek additional diversification or become dominate in a particular chemical product segment. This consolidation could come in the form of alliances and partnerships as opposed to M&A activity. On a longer-term basis, Fitch expects that 2009 could be a pivotal year as oversupply issues resulting from new capacity additions could cause producers to loose some of their pricing power Pricing Power An economic term referring to the effect that a change in a firm's product price has on the quantity demanded of that product. Pricing power ties in with the "Price Elasticity of Demand. . The full outlook report titled 'Overall 2008 Global Chemical Outlook is Stable' is available on the Fitch Ratings' website www.fitchratings.com. Specific outlooks for various segments of the chemicals industry are provided. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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