Weekly Thematic

Reshoring – Could It Create a Medium-Term Bubble Of Demand For Chemicals and Plastics?
September 21, 2020
Products Mentioned:
Ethylene, Polyethylene, Propylene, Polypropylene, Butadiene, PVC
Companies Mentioned:
LyondellBasell, Total, Borealis, Braskem, Dow, CP Chem, Nova, Celanese, Westlake, PPG, Axalta, Sherwin Williams, BayStar, Orbia, Olin
Subjects Covered:
Price Forecast, Base Case, China Demand, Upside Scenario, Forward Curve Oil and Gas

C-MACC Perspectives 28 – Price Forecast With A Twist

 

Reshoring – Could It Create a Medium-Term Bubble Of Demand For Chemicals and Plastics?

 

  • For our view of the expected industry dynamics for 2021 and 2022 to be wrong, demand would have to surprise to the upside – and track above long history correlations. Our view is not far from consensus; perhaps more negative.
  • The current expectation is that should the correlation to economic growth break it will be to the downside rather than the upside, because of the increased focus on sustainability, recycling, and elimination of plastic waste. COVID has added some near-term strength in some sectors and weakness in others.
  • But there is a scenario where the expectation of reshoring and China’s response to it creates real shortages for a couple of years simply because China moves much faster than those dependent on its exports.
  • We explore this risk and its potential impact on pricing in this expanded price forecast.

See PDF below for all charts and tables 

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