Daily Chemical Reaction
Ethylene Blues: Global Oversupply Worsening And Contagion Spreading Downstream – US Costs Help
Key Points:
- The global ethylene industry faces a considerable challenge with oversupply amid a sluggish demand setting – Europe faces much stiffer headwinds than most of Asia and North America.
- US spot ethylene spot prices have fallen to a multi-year low, though domestic producers are still profitable. We highlight the US spot and contract setting relative to NW Europe and Asia.
- NW Europe and Asia naphtha values reflect multi-year highs relative to USGC ethane, but this regional feedstock ratio excludes likely Chinese benefits from sourcing discounted Russian crude.
- Solar and wind projects appear relatively easy to finance – this environment could rapidly lead to the broadening of inefficient projects and a greater reliance on storage than most envision.
- The global cost of shipping cargoes declined rapidly in May, and we discuss commentary from Hapag-Lloyd, Old Dominion Freight Lines, and other news to frame the state of this market.
See PDF below for all charts, tables and diagrams