C-MACC Sunday Recap
Global Petrochemical and Plastic Market Chemistry Bound With Weak Bonds – Structural Fragility Near Peak Levels
- Power and logistic outages caused by Laura have kept enough US ethylene and derivative capacity offline to cause some mild panic at a time when COVID (both from a demand point and a supply security point) has buyers and sellers nervous.
- The result has been rising chemical and polymer prices – within the US and more recently in export markets dependent on US supply. As we have discussed several times, the world is not short of chemical and polymer capacity, but successive events have kept the appearance of a balanced to short domestic market in spite of a significant reliance on export demand, lifting relative domestic margins.
- Laura has lowered demand for ethane, and prices are falling, giving those US producers that can run windfall profits in September. Higher prices outside the US suggest windfall profits for global producers relative to two weeks ago. We continue to believe that the supply/demand chemistry here is fragile and held together with very weak bonds. With all capacity online – including new plants in China, seasonally weak 4Q could see a major reversal of fortune.
With continued focus on Laura this week and limited news flow we discussed 19 Chemical and related products and 35 Companies
See PDF below for all charts