City A.M: JP Morgan think a lack of frack is hurting European chemicals

JP Morgan has warned that the rise of shale gas could prove to be a "structural negative" for the European chemicals industry. 

JP Morgan remains negative on the European chemical sector citing BASF, Solvay, Lanxess (all under weight) as its least preferred options.

However, US chemical producers are booming due to a sharp fall in energy prices and significantly lower raw material costs, increasing their competitiveness in global export markets.

US capacity for ethylene (the largest petrochemical building block) is expected to grow by as much as 30 per cent by 2018.

European and Asian producers remain at a disadvantage compared to their US counterparts, with a greater reliance on more expensive oil-based feed stock.

Ethylene is already 30 per cent cheaper for US companies than their European counterparts. The research note forecasts that pricing power for European companies may be significantly limited in the near future. However, the multinational bank highlighted three categories which may see some winners emerge.  MORE