Thursday, Jul 19, 2012

--Some petrochemical companies able to exploit U.S. natural gas boom, Dow executive says

--Cheaper natural gas will help Dow Chemical offer lower-cost products, he says

--Mitsubishi Chemical says it hopes to open a factory in North America

(Adds comments from Dow Chemical executive, Mitsubishi Chemical president, background on U.S. petrochemical projects, analyst comment) 


 
   By Mari Iwata

TOKYO--Petrochemical producers who can exploit the boom in U.S. shale-gas production will be better positioned to expand global market share than competitors who use more costly naphtha, an executive at industry giant Dow Chemical Co. (DOW) said Thursday.

Dow Chemical's use of natural gas as a feedstock enables it to provide its customers with cheaper products, Diego Donoso, global vice president for the thermosets division of Dow Chemical, told reporters in Tokyo.

"This is not only about shale gas," he said. Companies using any low-cost feedstock will be able to expand market share globally, including Middle Eastern companies that use natural gas as feedstock, he said.

Low natural gas prices resulting from the shale-gas boom in the U.S. are stimulating new investments in petrochemical plants there.

In March, for example, Royal Dutch Shell Plc (RDSA) said it would build a $2 billion petrochemical plant in the U.S. state of Pennsylvania, near the Marcellus Shale formation, and would use natural gas as a primary feedstock.

Also in March, Dow Chemical Chief Executive Andrew Liveris said his company, which processes around 850,000 barrels a day of oil equivalent into plastics and other products, is focusing on increasing its U.S. presence due to the lower gas prices.

Yoshimitsu Kobayashi, president of Mitsubishi Chemical Holdings Corp. (4188.TO), Japan's largest petrochemical company by revenue, said Thursday that he also has been looking for a good opportunity to build a factory in North America.

Japanese petrochemical makers will have to go where they can use low-cost natural gas in order to remain competitive, he said.

Lower-cost U.S. products are already hitting Asia, Barclays said in a note this week. "There is anecdotal evidence that Asian chemicals producers and converters are seeing impacts from increased U.S. chemical plant utilizations and imports of some products," it said.

Natural gas prices in Japan are around four times higher than in the U.S. Japanese petrochemical makers use naphtha as their primary feedstock.

Write to Mari Iwata at mari.iwata@dowjones.com

(END) Dow Jones Newswires

19-07-12 1000GMT