Global Processing

Chemical sector mixed amid uncertainty

September 12, 2005

Days after Hurricane Katrina sunk the nation''s gasoline supplies and buoyed energy prices, investors Thursday, September 8 allowed shares of major chemical companies — whose livelihoods are largely linked to natural gas and petroleum prices — to ebb in mixed trading, as uncertainty remained over how the storm would affect profits. The Dow Jones U.S. Chemical Index was down 49 cents, or 0.25 percent, in late trading Thursday, following a flurry of mixed analyst reports this week over how chemical makers stand to fare in the aftermath, the Associated Press reports. Over 25 percent of U.S. crude oil production was initially affected by Hurricane Katrina, and up to 15 percent of the nation''s refinery capacity was shut down for the first few days, cutting gasoline production by about 10 percent. The disruptions sent gasoline prices skyward. Chemical companies are highly sensitive to energy costs because petroleum and natural gas are the raw materials for many of their products. In addition, overly high energy costs can curb production by manufacturers, reducing demand for chemicals.