The Weekly Catalyst
Global Chemical Update – September in the Rain
Key Points:
- Global polymer prices declined again WoW, but global feedstock prices, on avg., fell more, halting further profit declines for integrated producers that, in some cases, are below 2018/19 levels.
- We see a greater risk that feedstocks/energy costs march higher into year-end, further pinching integrated polymer producer profit than polymer price strength spurring a rebound in margins.
- Street profit estimates, per our view, have not fallen enough for 2H22/2023 to give us confidence that an investor sentiment shift from negative to positive towards chemical sector equities is at hand.
- US ethanol margins held up WoW, crop prices on average also reflect support, and fertilizer prices rose relative to feedstock costs. Our constructive view of the agriculture sector remains intact.