Daily Chemical Reaction
Oh Laura! – Upstream Issues Pose The Concern, US Vinyl (PVC) Chain Risk Greater than PP & PE
- We hold a view that downstream petrochemical derivative markets are set to return to normal faster than their upstream feedstock markets following Hurricane Laura – we base this on the view of greater complexity upstream with restarts, logistical issues likely being resolved quickly and most USGC downstream/derivatives being traded on a global scale (supply responses will inevitably come if downstream product prices surge too far, too fast).
- Based on the path of the storm and our findings this morning, we view the most notable risk of production issues facing assets in Lake Charles, LA (e.g. LyondellBasell PP; Westlake ethylene/PE, EDC & VCM; Sasol ethylene/PE). Our talks suggest the potential for further PVC tightness from both EDC and VCM issues at Westlake lacks adequate appreciation – see detail in report.
- Other items worth note today include BHP Group thoughts on the China recovery, polymer market strength in China (notably in LDPE spot markets WoW) in part due to supply chain issues, and still weak lithium spot markets.
See PDF below for all charts