Daily Chemical Reactions

Take On Me – Cheap Russian Crude Cuts Chemical Production Costs In China, Keeps Inflation In Check 
May 16, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
PPG, Sherwin-Williams, Celanese, Avient, Shell, Ineos, Oneok, Magellan Midstream, Tianqi Lithium, Asahi Kasei, BASF, LG Chem, Nissan Chemical, Sumitomo Bakelite, Sakai Chemical, Orbia, Wanhua, Gail, Apollo Management, Wood Group, Worley, Venator, DIC, Eastman, Sumitomo Chemical, Solvay, Osaka Soda, Tokai Carbon, Ube, Borealis, MOL, Wacker, TotalEnergies, Evonik, Arkema, Syngenta, FMC

Daily Chemical Reaction

Take On Me – Cheap Russian Crude Cuts Chemical Production Costs In China, Keeps Inflation In Check 

Key Points:

  • China chemical producers and refineries will likely benefit from discounted Russian crude in 2023 – a plus for its global competitive position and low relative inflation compared to the West.  
  • Brent Crude values have fallen relative to natural gas in 2Q23, flattening the global chemical production cost curve – those receiving cheap Russian crude are in a more favorable position.
  • We discuss recent movements in global HDPE production margins, highlight weakness in US spot propylene and ethylene in 2Q23 relative to 1Q, and flag MOL 1Q23 quarterly results. 
  • We discuss EIA estimates for electric vehicle (EV) adoption, the continued cost overruns in winds at Siemens Gamesa, and the many challenges facing European zero-emission goals. 
  • The Home Depot 1Q23 report and market commentary supports the case that building and construction markets are weak, and China business activity trends also miss expectations. 

See PDF below for all charts, tables and diagrams

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