Daily Chemical Reactions | Sunday Thematic & Weekly Recap

US Cost Advantage: More Fragile Than Usual
September 5, 2021
Commodities Mentioned:
PVC, Polypropylene, Polyethylene, Polystyrene, PET, Ethylene, Propylene, Methanol, Maleic Anhydride, Lithium, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha, MDI-polyurethanes, Polyols, Chlorine, Caustic Soda, Aluminum, Engineering Polymers, Paint, Building Products, Water, Butadiene, Amines, Benzene, Acetone
Companies Mentioned:
LyondellBasell, H.B. Fuller, W.R. Grace, Arkema, Ashland, Avantor, BASF, Kraton, Lummus, Nouryon, Orion Eng. Carbons, Phillips Carbon Black, Repsol, SABIC, Sayona Quebec, Shell, Sinopec, SK Global, Standard Industries, Borealis, OMV, Sumitomo Chemical, TotalEnergies, ExxonMobil, CP Chemical, Enterprise Products, Formosa Plastics, Pinnacle Polymers, Methanex, INEOS, Amazon, Ballard, Ikea, Hyundai Oilbank, Mitsubishi Chemical, Indorama Ventures, C.H. Robinson, Lanxess, Covestro, Dow, Huntsman, Eastman Chemical, PetroChina, Chevron, Enbridge, DAK Americas, Symrise, Eneos, PTTGC, KBR, Kolon Industries, Lukoil, Yara, Haldor Topsoe, Michelin, Domino’s Pizza, Freeport LNG, Walmart, Best Buy, First Solar, Vestas, Origin Materials, Alcoa, Tesla, Freeport McMoRan, Albemarle, Livent, Danimer Scientific, Newlight Technologies, Fulcrum Bioenergy, Nike, Air Products, Talos Energy, DWS, Solaris, Element Solutions, Tatneft, Azelis, Phillips 66, OxyChem, Westlake, Formosa, Shintech, Olin, SIBUR, DuPont, LG Chem, Chandra Asri, Tesco, Pemex, LanzaTech, GM, Nissan, Bed, Bath & Beyond, Coca-Cola, Tianyi Lithium, DSM, Kemira, Sadara, Reliance, NuStar, BP, Hewlett Packard, Monolith Materials, Hyundai, Suzuki, Peloton, Marathon Petroleum

C-MACC Sunday Thematic & Weekly Recap 82

US Cost Advantage: More Fragile Than Usual

  • US ethylene production costs relative to Asia reflect more benefits from the YoY surge in higher co-product values than lower feedstock costs – this looks fragile.   
  • The potential for regional co-product prices to “normalize” in 2022 is high and holds more risk than weaker US feedstock (oil vs. gas) ratios – we frame our case. 
  • Considering still robust natural gas/LNG demand, US chemical and polymer exports will likely grow but drive more marginal returns in 2022 than 2020/2021.
  • Freight rates will need to correct meaningfully for relative prices to normalize – we do not see that happening this year but think the correction occurs in 2022. 
  •  Otherwise, we discuss Hurricane Ida as a near-term support factor for US prices, inflation in all things climate-related, and still notably positive refining margins.

Last week we discussed 30 Chemicals and related products and 110 Companies.

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