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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.
See PDF below for all charts, tables and diagrams