The direct impact for US petrochemicals producers is limited, though the Japan supply dislocation could cause ethylene prices to go up near term. Outside of petrochemicals, we also believe the direct impact on electronic chemicals producers like DD, DOW and APD is limited. In addition we have received numerous questions about the impact on US natural gas prices. Citi’s E&P analyst Bob Morris believes there is little to no impact on US natural gas demand.
Japan accounts for 3% of sales for DOW and 5% for DD, and both companies have electronics facilities in the region. DD’s research and manufacturing facility in Utsunomiya incurred some damage and is expected to remain closed until assessments are completed. The remaining DD sites in Japan are operational. For DOW, one facility experienced flooding but the rest are operational. We do expect some impact on demand as wafer production has been halted at Shin-Estu Chemical’s Shirakawa plant and SUMCO’s Yonezawa plant. Overall, Japan accounts for over 30% of global semiconductor capacity. See also processor operations being halted
