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Fitch: U.S. Chemical Producers Battle for Margin Expansion in 2006
Monday December 12, 10:09 am ET

CHICAGO--(BUSINESS WIRE)--Dec. 12, 2005--Fitch Ratings expects U.S. commodity producers will realize strong margin expansion during the final quarter of 2005 and continue through the first half of 2006, as discussed in Fitch's 2006 industry outlook. The duration of peak-like margins will depend on economic growth and volatility in raw material prices, which, though currently higher, Fitch believes will moderate by year-end 2006. Supply disruptions and planned maintenance turnarounds will lead to tightened supply/demand balances. Fitch also predicts that volume growth will remain healthy, albeit slower, in 2006 due to rising interest rates and inflationary pressures.

Fitch anticipates refinancing activity could be somewhat higher in 2006 as certain producers repay upcoming maturities and others look to refinance existing bank debt. Credit metrics, which reached mid-cycle levels for most producers in 2005, will likely be stronger for each of their respective ratings categories as the chemical industry approaches its peak in 2006.

Fitch will host a teleconference at 11:00 a.m. EST today, Dec. 12 to further discuss its outlook for the U.S. chemical industry. Interested parties in the U.S. and Canada should call +1-877-241-2557, and participants outside North America should call +1-706-643-7396. Participants should give the title of the call as 'Fitch Ratings Chemicals Industry Outlook' or the conference ID Number 3043564.

The full outlook report 'Chemical Producers Battle for Margin Expansion in 2006' is available at www.fitchratings.com . A full list of chemical issuers and respective Fitch ratings can be found in the report.

Fitch's rating definitions and the terms of use 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 are also available from the 'Code of Conduct' section of this site.

Source: Fitch Ratings

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