Daily Chemical Reaction
I Walk The Line – Steeper Global Petrochemical Cost Curve Favors Price Support, A Plus For US Profits
Key Points:
- Global chemical production cuts and a steeper production cost curve spurred early 2023 price hikes, favoring higher US export prices and upticks in its production relative to Asia and Europe.
- We highlight numerous IEA exhibits that display growth in electricity demand, where Asia is leading, and argue that longer-term power demand is likely being underestimated by most.
- We flag strength in spot propylene and benzene relative ethylene in the US, suggesting more production cuts in these heavier chains and note that 1H23 outage season is still ahead of us.
- The demand for natural gas power generation is likely underestimated in the near-to-medium term relative to renewables, as numerous factors suggest the continuation of project delays.
- We discuss several US macroeconomic data points suggesting improvement in early 2023 and why we continue to model sluggish global economic conditions through the end of the year.
See PDF below for all charts, tables and diagrams