C-MACC Sunday Recap
Harmonies Amplify Emotion, Puts the Grim Reaper In Motion
- Supply and demand imbalances create price reactions that can extend to create harmonies, decreasing or increasing comfort levels shortly before the tempo changes direction. Today there is a high level of comfort in both US chemical prices (up) and recent corporate commentary (3Q recovery) reassuring many while the Grim Reaper is likely sharpening his blade
- This week we discussed strength in multiple US chemical products (notably, Propylene and Polyethylene), likely a step behind a strong June pick up in incentives to export – mainly to China – as the market reacted to some outage-led shortages. But China prices now face downward pressure, and COVID surges, suggesting short lived pricing power in the US and a tougher 3Q.
- Non-integrated buyers (notably PPG and Alpek) with 2Q reports highlighted likely lower margins in 2H20 – partly driven by higher feedstock costs but do not factor in the emerging downshift in 2H20 recovery expectations and this is a notable concern in our view. 2H20 demand appears likely to disappoint.
This week we discussed 22 Chemical and related products and 54 Companies
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See PDF below for all charts and tables