C-MACC Sunday Recap
Macro and Micro Signals Are Not Aligned For Chemicals
- Last week we talked about the quality of data – this week we will focus on inconsistency – the big picture data is not aligned with the smaller data points – especially in China, where the macro data around consumer spending growth seems at odds with the high levels of chemical production and very high import demand – we are increasingly concerned about inventories in China.
- Meanwhile, strength in the US market almost seems choreographed, with August US plant closures coming hot on the heels of China sucking up all of the spare ethylene in June and July. Apparent demand is too high (because of a pull from exports) and apparent supply is reduced because of plant closures in both ethylene and propylene. A reversal awaits – how ugly it is remains to be seen.
- In the meantime, the direct drivers of the global cost curve are not reflective of the simple oil to gas ratio. Ethane remains expensive versus natural gas and international naphtha remains at a discount to crude. In our revised forecast this week, the US continues to make money, but others will likely struggle.
This week we discussed 22 Chemical and related products and 52 Companies
See PDF below for all charts