C-MACC Perspectives No 22
July Price Forecast Update
- The 2Q price strength in Asia appears to have created the inevitable supply response – we expect 3Q to be volatile but with a negative direction to ethylene prices and margins as more capacity becomes available.
- The OECD produced an economic forecast recently that included a “second wave” downside – we have adopted a hybrid of the two given the resurgence in COVID since the forecast was published. 4Q 2020 looks weak on that basis – new capacity and no demand growth.
- With the new ethylene and derivative capacity expected this year and next and with demand for all but polyethylene stalled, we see weaker margins once the volatility is past with 2021 and 2022 similar and not exciting.
See PDF below for all charts