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what we are talking about today

Daily Chemical Reaction

Global Chemical Update – Bright Side Of The Road

US integrated petrochemical producer margins remain elevated on both a YoY basis and relative to 2H20 average levels. Today, we highlight trends in China’s spot polymer markets and a few 1H21 factors that may shift in 2H21.
Other items highlighted in this report: Ex-US naphtha values drop relative to USGC ethane WoW; China PET spot markets tighten, while several peer large-volume polymer chains reflect weakness; US spot propylene rises WoW, while ethylene values weaken after hitting a five-year high and benzene falls

Enough: Chemical Production May Have Caught Demand

While some of the air is coming out of the pricing bubble, especially in Asia, it is hard not to be fascinated by the exceptional chemical and polymer demand rates, which continue, and are captured in secondary data, such as port utilization.
The incentive to produce basic chemicals has finally resulted in a supply response that appears to have caught up with demand – in most cases, but operating rates are high and, unless we see a price collapse in the US, 1Q 2021 could be as good as 4Q 2020. Guidance in approaching earnings calls will be interesting.
We would remind all that the macro environment changed dramatically during two earnings periods last year resulting in very different guidance from the later reporters versus those who reported earlier in the periods. Depending on the race between COVID infection and vaccination outlook tone could vary based on timing.

Beyond The Sea – US Ethylene & Propylene Remain Elevated Relative to Asia, Regional ESG Efforts Rise

We evaluate USGC spot ethylene and polymer grade propylene prices at the close of the week. Both reflect sizable improvement since the end of 2020 and trade at premium levels to Asia – a setting unlikely to endure long-term.
We highlight multiple corporate items (e.g., Aviant, Ineos, Inter Pipeline, Shell & Tellurian project news; BASF & YNCC petrochemical production updates; Numerous ESG news and downstream product health updates)
Other relevant items in this report include the recent increase in USGC ethane values relative to ex-US naphtha, an estimated material roadmap for zero-carbon cars, and a Port of Los Angeles import traffic update.

what we are saying about tomorrow

C-MACC Scenarios & Persepctives 

The Right Stuff – It’s OK to Pursue Multiple Initiatives – But Ideally the Fewer Blind Alleys and White Elephants the Better

As the new US administration takes shape, we foresee legislative proposals that make significant economic and “end-game” sense and others that fit neither category. It will be hard to get it all right from the start – we offer a guide.
Legislation is only likely to pass if achieves the dual goals of moving the climate initiatives forward while creating as many jobs as it costs and minimizing the risk of inflation or creating competitive disadvantage
Repeating a prior bullet, 2021 needs to see more global coordination on incentives and penalties

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