Daily Chemical Reaction
High On Your Supply – Early 2Q Indicators Show Global Logistic Issues Further Abating, Price Headwinds Stiffen
- Global freight rates reflect downward pressure in 1H23, supporting the case for supply chain improvements and suggesting reduced commodity price differentials between regions in 2023.
- US Butadiene (BD) prices have increased QTD relative to NW Europe and Asia, with some tying recent price weakness in Asia to falling demand offsetting recent increases in production costs.
- We flag recent movements in Brent Crude relative to Asia, NW Europe, and US natural gas, and discuss construction cost escalation and potential delays with many LNG project developments.
- We note that renewable energy cost of capital is lower in Europe than oil and gas but argue that this does not imply it is or should be the only solution, and we note US EV market views.
- Western government subsidies have significantly risen since 2020, including those that target clean energy and semiconductors that have spurred US capital investment in manufacturing.
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