Daily Chemical Reactions

All My Loving (I Will Send To You…If You Can Take It!) – US Chlor-Vinyls Meaningfully Cost Advantaged
February 22, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
Westlake, Oxy, Olin, PPG, Hanwha Solutions, Celanese, Air Liquide, Lapis Energy, Shell, Dow, Johnson Matthey, BP, Williams, Honeywell, Idemitsu, BASF, Arkema, Siegfried, Element Solutions, Advanced Petrochemical, PetroChina, Rio Tinto, Tellurian, Freeport LNG, Asian Paints, Givaudan, Alcoa, Huntsman, Toray, Origin Materials, Avangrid, Avantium, LSB Industries, Cepsa, Brenntag, Sasol, Topsoe, Cummins, Arcadia, Home Depot, Walmart

Daily Chemical Reaction

All My Loving (I Will Send To You…If You Can Take It!) – US Chlor-Vinyls Meaningfully Cost Advantaged

Key Points:

  • We highlight US cost advantages in Chlor-alkali and ethylene relative to Europe (and Asia), and why we take a constructive view of domestic vinyl producers, such as Westlake and OxyChem.
  • US natural gas prices fell relative to crude in 1Q23, after its sizable fall compared to Europe and Asia gas prices in 2022, putting varied but persistent pressure on overseas chemical profits.
  • We reiterate our positive view of Westlake, highlight the 2023 challenges noted from Hanwha Solutions with its 4Q22 report, and discuss headwinds facing the PPG margin recovery story.
  • The recent US natural gas price drop has pushed down its power generation costs relative to renewable alternatives, making a case for some renewable power solutions more challenging.
  • The Baltic Exchange Dry Index has declined YTD, supporting the case for improving global supply chain health, while retailer views of consumer spending are becoming more cautious.

See PDF below for all charts, tables and diagrams

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