Daily Chemical Reaction
Am I Safe – Rising Supply, Tepid Demand Add To 2Q Concerns; Rotation To Safety To Likely Stay In Motion
- US chemical sector equities have underperformed the market YTD. Fertilizers & Agricultural chemicals have underperformed, while industrial gases have outperformed the sector on avg.
- We remain most concerned with US commodity chemical equities amid indications of global supply improvement but still-tepid demand during the remainder of 2Q23 and into 2H23.
- We take a more constructive view of specialty chemical and industrial gas equities in the near-to-medium term, as we think the investor flight to safety will remain in motion near term.
- We discuss recent movements in global petrochemical feedstocks, highlight the May propylene contract settlement in the US, and flag efforts in Asia to use ammonia as a shipping fuel.
- We discuss recent weakness in the Baltic Exchange Dry Index, which adds to our concerns with the global economy and conflicting consumer reports, though overall, our concerns remain high.
See PDF below for all charts, tables and diagrams