...North American Advantage Expected to Remain Fitch expects light feedstock crackers to maintain a cost advantage in the long term, despite the drop in oil and the resulting increased competitiveness of naphtha as a cracker feedstock. Naphtha-based co-product prices (used to offset cash cost of naphtha) have seen even greater declines, with most heavy feedstock co-products at or near post-shale revolution lows. Additionally, despite additional light feedstock cracking capacity slated to come online in the 2017¡2019 timeframe, there is still a large amount of ethane being rejected into the natural gas stream. The additional potential source of ethane should cap a rise in light feedstock prices stemming from new cracker demand in the U.S. However, Fitch does expect the North American cracker margin compression from peaks seen in 2012 to continue as prices of crude oil and its derivatives remain depressed. Healthy North American Olefin Demand Many chemicals companies consume their olefin production...
