Daily Chemical Reactions

Too Drunk To Drive – 2H22 Consensus Views Lag Reality, Opportunities To Emerge As They Sober Up
September 9, 2022
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
Westlake, Formosa Plastics, Occidental, Shintech, Olin, Freeport LNG, INEOS, Aemetis, SoCalGas, Santos, Woodside, Williams, Linde, Calibre Chemicals, Mitsui Chemicals, OMV, SABIC, Sibur, BASF, Samsung Heavy Industries, Chevron New Energies, Hanwha Solutions, Technip Energies, Thyssenkrupp, Raven SR, Reliance Industries, Toyota, Tesla, GM, Lummus Technology, Maersk, Synthos, Ohmium, Blackrock

Daily Chemical Reaction

Too Drunk To Drive – 2H22 Consensus Views Lag Reality, Opportunities To Emerge As They Sober Up

Key Points:

  • US (and global) commodity profitability sharply fell on a spot basis in 3Q22, and sector equities reacted. Stale sell-side consensus profit views have not and are mostly wrong.
  • US natural gas and USGC ethane values declined more than Brent Crude and Ex-US naphtha values this week, a modest relative plus for US petrochemical producers.
  • US polyvinyl chloride (PVC) prices have collapsed relative to NW Europe in 3Q22, and integrated profit has fallen. We foresee near-to-medium-term improvement ahead.
  • We discuss the recent downward movement in virgin resin prices relative to recycled resin and highlight our constructive view of the sustainable aviation fuel market.
  • Chemical and plastic inventories increased relative to shipments in July, but we think this trend likely reversed in August. We also flag rising US mortgage rates MTD.

See PDF below for all charts, tables and diagrams

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