Daily Chemical Reactions

Global Cost Curve Flattens As High China Inventory Becomes A Supply Overhang Risk
August 5, 2020
Commodities Mentioned:
Natural Gas, Brent Crude, Ethane, Naphtha, Propane, Polyvinyl Chloride (PVC), Ethylene Di-Chloride (EDC), Caustic Soda, Methanol, Ethylene, Propylene, Polyethylene, Paraxylene, PTA, Acetone, Hydrogen
Companies Mentioned:
Westlake, Olin, Methanex, SCC, LyondellBasell, Natgasoline, Celanese, Mitsui, Trecora Resources, Ferro, ADNOC, Wanhua Chemical, Clariant, Hexion, Wayfinder, Huntsman, ExxonMobil, SABIC, CP Chem

Daily Chemical Reaction

 

Global Cost Curve Flattens As High China Inventory Becomes A Supply Overhang Risk

 

Key Points:

  • US Natural Gas prices surge higher to outpace the strength in Brent Crude and work in favor of a flatter petrochemical cost curve – a negative for US producers who already face mounting headwinds into late 2H20 (and 2021). At the same time there are emerging signs that China has too much inventory.
  • We see more positives surrounding Westlake relative to Olin ahead of their 2Q20 reports, and we also frame recent USGC methanol price strength.
  • Other items worth note today include the Trecora Resources and Ferro 2Q reports, early August US HDPE price strength but our unchanged view noted yesterday that points to fading momentum, and the EU hydrogen strategy.

See PDF below for all charts and tables 

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