Lonely Teardrops – Depressed US Spot Ethylene Sits Mostly Alone & Stranded; A Setting Likely To Change

Daily Chemical Reaction

Lonely Teardrops – Depressed US Spot Ethylene Sits Mostly Alone & Stranded; A Setting Likely To Change

Key Points:

• The North American ethylene spot market continues to face derivative production cutbacks and limits on its ability to serve higher-cost US export consumers – a setting likely to change.
• We discuss shifts in the global ethylene production cost curve and recent beneficiaries of cheap US ethylene and outage-supported derivative prices that could face headwinds in 2H23.  
• Weakness in crude values and supportive fuel prices spurred a rebound in US refinery margins during the past three weeks, with many counting on strong summer fuel demand for support.
• Energy companies demanding positive medium-term returns from green energy investments continue to rise – a plus for their shareholders, but likely to revive already high activist pressure.
• We discuss Walmart results and comments on consumer spending, which we compare with the recent Home Depot, Target, and T.J. Maxx results – shoppers increasingly turn to bargains.

See PDF below for all charts, tables and diagrams