Monthly Thematic Piece

Auto Industry Recovery – Important For Chemicals – Unclear
July 30, 2020
Products Mentioned:
Propylene, Benzene, Toluene, Xylenes, Polypropylene, Polyurethanes
Companies Mentioned:
Amazon, Google, Borealis, LyondellBasell, Dow, BASF, Huntsman, Covestro, Trinseo, SABIC, DuPont, Alranxeo, PPG, Axalta, Nippon Paint, Goodyear, Michelin, Cabot, Orion Engineered Carbons
Subjects Covered:
Economic Growth, Auto Demand and Manufacture, Used Car Sales and Values, US Vehicle Miles Driven, Gasoline Demand And Refinery Operating Rates

C-MACC Perspectives No 25

 

Auto Industry Recovery – Important For Chemicals – Unclear

 

  • Our analysis suggests that new auto sales will likely be volatile over the next 2-3 years but will be below the levels seen in 2019 consistently, and that only part of the 1H2020 pent up demand will materialize.
  • The surge in used car availability has so far been met by a surge in demand (in the US) likely from delivery services  (take out and Amazon) – we think it is a bubble, as is the surge in luxury used car sales likely from rental car inventory.
  • Overall we expect demand for paints and polymers in Autos not to recover to 2019 levels – possibly for ever, if economic hardship intersects with a growth in Taas. We are equally pessimistic about gasoline demand – and while it will grow, it may not see 2019 levels in the US and Europe again.  This could elevate propylene pricing into materials that are seeing subdued demand such as polypropylene and polyurethanes

See PDF below for all Exhibits 

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