Daily Chemical Reaction
Fatal Attraction – 1Q23 US Petrochemical Margin Boost Will Lure Production, Profit Squeeze Ahead For Most
- US petrochemical markets have lost much of the positive momentum seen in early 2023, and it could reverse abruptly in 2Q23 as domestic production rebounds amid now elevated margins.
- We highlight an outlook for crude oil and natural gas values in 2023, with the state of Chinese demand being a swing factor, and show US ethylene production costs relative to Europe and Asia.
- US polyethylene producer nominations call for a contract price hike in March, though regional spot and feedstock market trends do not support it. Early-year positive momentum has lessened.
- Global gov’t energy transition policies and regional differences are a focus at WPC. The EU set up a regulatory framework to enable the transition, but the US IRA creates a business case for it.
- We discuss North American rail volume and Baltic Exchange Dry Index movements that, on a combined basis, suggest that production cutbacks have occurred in support of market balance.
See PDF below for all charts, tables and diagrams