Daily Chemical Reaction
Chains and Things – Feedstock Cost Declines Benefit Domestic Chemical Producers, Some More Than Others
Key Points:
- North American petrochemical producers have benefited from significant cost relief since late 2022 – we think US PVC producers could benefit more than most expect.
- US natural gas and USGC ethane have declined 43% and 22% in the past 30 days, which compares to increases in Brent Crude and Ex-US naphtha – a positive for US chemicals.
- Domestic methanol producers are notable beneficiaries of falling natural gas prices, though, unlike PVC, we observe methanol derivative prices under pressure in China.
- We see a tipping point for the mechanical recycling market in 2023, as producers face significant margin pressure, and we discuss why we are not a fan of windfall taxes.
- We flag downward revisions in 2023 economic forecasts and highlight why corporates should give conservative profit guidance for the year rather than risk missing targets.
See PDF below for all charts, tables and diagrams