Daily Chemical Reaction
Kick Start My Heart – Indicators Support US Production Revival – Can the Market Handle it?
Key Points:
- US industrial production limped higher into 2023, but the curbs have tightened commodity markets while the US input/energy cost advantage rose. A domestic production revival is ahead.
- US natural gas prices have fallen ~30% during the past 30 days, while Brent crude values rose ~10% – this has steepened the cost curve in favor of North American chemical producers.
- We view a steep petrochemical production cost curve, led by high crude prices, as a likely must-have for domestic commodity producers to exceed consensus 2H23 profit estimates.
- We highlight more specialty chemical producer outlooks calling for higher prices in 2H23 based on strong demand and lower input costs due to oversupply – we do not think they will have both.
- We highlight numerous ESG/clean energy findings, including Aker Carbon Capture 4Q results, and discuss multiple end-market demand indicators that keep our relative global concerns high.
See PDF below for all charts, tables and diagrams