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