Daily Chemical Reactions

Holding Back The Tide – Production Cuts Will Sink Inventories But May Drown Some Cost Relief Views
January 19, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
Asian Paints, H.B. Fuller, PPG, Axalta, Huntsman, Yara, Orbia, Arkema, EV Metals, Borealis, Borouge, Indorama, Shell, Chesapeake Energy, Lotte Chemical, LG Chem, Linde, Alcoa, Santos, BHP, Nucor, BASF, Harbour Energy, Aramco, Motive Trading, Phillips 66, RCS Group, BP, ICL, Arkeon, Insteel Industries, Greenland Resources, Octopus Energy, NextDecade, Itochu Corporation, Topsoe A/S, NEXT Energy

Daily Chemical Reaction

Holding Back The Tide – Production Cuts Will Sink Inventories But May Drown Some Cost Relief Views

Key Points:

  • Initial chemical sector 4Q reports and outlooks support consensus views of commodity weakness and non-integrated derivative producer benefits. Risks vary by region.
  • US natural gas and ethane prices have trended considerably lower relative to Brent Crude and Ex-US naphtha relative to 2H22 highs, and we discuss early 2023 trends.
  • North America (and US) chemical rail traffic trended lower in late 2022 and early 2023, supporting the case that chemical producers curbed run rates to normalize inventory.
  • We highlight lofty estimates for renewables to increasingly displace natural gas and coal power generation and mounting efforts to drive circular product developments.
  • We discuss the high hopes of a Chinese demand revival in 2023 and implications for the global chemical sector, and we flag a few relevant European demand trends.

See PDF below for all charts, tables and diagrams


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