Daily Chemical Reaction
Asia-Malaise-ia! Chemical Demand Recovery Short of Expectations, Sector Oversupply & Profit Risks Mount
- The chemical industry has a demand problem, not a supply problem. Global economic data supports our concerns and the case for another year of lower Asia inflation than the West.
- Petronas Chemicals provides a short-term outlook with its recent 1Q23 results, noting that the 1H23 demand recovery is modest, broadly weaker than expected, and supports our concerns.
- Weakness WoW in crude oil values relative to natural gas suggests the global petrochemical production cost curve at the feedstock level, favoring more production and lower global profits.
- The EIA highlights that US households in energy-insecure areas pay more. We also flag global Wind order books trending to record levels in 1H23 and Australian low-carbon ammonia projects.
- China, South Korea, and Thai factory activity missed expectations, and manufacturing activity in Texas weakened in May. We also discuss the decline in the global Baltic Exchange Dry Index.
See PDF below for all charts, tables and diagrams