Global Chemical Update – Soul to Squeeze

Key Points:

NW European Natural Gas prices have surged higher following their mid-2H22 flop, a risk we noted in our early 4Q22 research for European chemical production but a net plus for US exporters.
Global nitrogen/ammonia fertilizer prices held up WoW, helped by rising production costs, which were considerably higher in NW Europe relative to the US. A notable plus for domestic producers.
USGC ethane values rose relative to Ex-US naphtha values WoW, flattening the global ethylene cost curve a bit at the feedstock level. US natural gas also surged higher compared to Brent Crude.
Global polymer values, on average, were modestly lower WoW, with polypropylene values seeing the most significant decline per our model, while polyethylene reflected the most support.