Daily Chemical Reactions

The Fire Inside – Global Chemical Oversupply Looks Severe, But Inventory Moves Can Be Deceiving
December 14, 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, Olin, Oxy, Shin-Etsu, Formosa Plastics, Orbia, Chevron, Phillips 66, Versalis, Wanhua, INEOS, NextEra Energy Resources, Air Liquide, Pertamina, Covestro, Electra, Cleveland-Cliffs, Saint-Gobain, Linde, Matheson, Freeport LNG, Cyclyx, Petro Rabigh, REV Group, Weber, Delta, DCW, Albemarle, Lithium Australia, Redwood Materials, BASF, Tesla, Vestas, GE, Hyundai, Air Products

Daily Chemical Reaction

The Fire Inside – Global Chemical Oversupply Looks Severe, But Inventory Moves Can Be Deceiving

Key Points:

  • Global petrochemical markets are oversupplied despite recent operating rate cuts, suggesting any improvement in profitability will trigger a supply response near term.
  • European natural gas prices have surged relative to US Henry Hub gas values, which remains at an above-average price premium to most other North American markets.
  • Despite collapsed production rates in some major regions, we highlight no-to-low global petrochemical producer profits suggesting conditions remain oversupplied.
  • We argue that the European border tax on carbon is an item the region does not need, as its manufacturers face much more significant challenges than relative carbon costs.
  • We discuss refined petroleum product tanker rates, recent movements in the Baltic Exchange Dry Index, and the shortening timeline for Chinese products to reach the US.

See PDF below for all charts, tables and diagrams

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