Daily Chemical Reactions

Livin’ On A Prayer, And Even The Holy Spirits Are Likely Questioning US PE Contract Support In 4Q22
December 7, 2022
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
Shell, Dow, LyondellBasell, Sasol, CP Chemical, ExxonMobil, Baystar, Nova Chemicals, INEOS, Sinopec, Evonik, Wacker, BASF, Borealis, Trillium Renewable Chemicals, Ultium, Chemfab Alkalis, LG Chem, Posco Chemical, Trinseo, Ferroglobe, Fusion Fuel, Axens, TC Energy, Adama, Mosaic, Sun Hydrogen, Sempra, Blackrock, Ecopetrol, OCI N.V., Orsted, AeroVironment, Canfor, NRG, TSMC

Daily Chemical Reaction

Livin’ On A Prayer, And Even The Holy Spirits Are Likely Questioning US PE Contract Support In 4Q22

Key Points:

  • US polyethylene (PE) contract price support relative to US spot prices in 4Q has pushed the contract premium to more than a 10yr high, and we view it as unsustainable.
  • We highlight movements in USGC ethane, propane, and NGL fractionation margins, as we view North American petrochemical producers in an enviable sourcing position.
  • We highlight the US ethylene contract price posting for November relative to spot US and Asia levels and show the sizable US production cost advantage relative to Asia.
  • We discuss several global investment initiatives in climate and waste, ongoing efforts to manage energy and chemical carbon footprints, and European ESG policy risk.
  • We highlight the significant decline in lumber prices YTD that has triggered Canfor to cut production in the face of weak demand and flag other slowing market indicators.

See PDF below for all charts, tables and diagrams

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