Chain Smoker – High Energy Sector FCF & Long-Term Return Risks To Lift Its Chemical Chain Investments

Daily Chemical Reaction

Chain Smoker – High Energy Sector FCF & Long-Term Return Risks To Lift Its Chemical Chain Investments

Key Points:

• Energy sector growth investment will increasingly target derivative product chains, such as chemicals, as upstream long-term return risk and ESG pressure remain high.
• We discuss Enterprise Products 2Q22 results and highlight the US ethylene cost advantage relative to Asia, elevated NGL fractionation margins, and its ambitions.
• The Andersons 2Q results illustrate many areas of the US agriculture economy are in great shape, supporting our constructive near-to-medium term views.
• Berry Plastics highlights the GHG emission footprint of plastic packaging is lower than many alternatives. We also note hydrogen blending prospects with natural gas.
• We flag falling freight rates from China to the US, material sourcing issues facing German automakers, and US Dollar strength relative to other major currencies.

See PDF below for all charts, tables and diagrams