Daily Chemical Reactions

Desert Rose – US Drought Supportive Of Crop Prices, Commodity Chemicals Remain In A Flood Of Supply
June 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:
Cabot, CF Industries, Nutrien, LSB Industries, FMC, Corteva, Bayer, BASF, ADM, Valero, Green Plains, The Andersons, POET Biorefining, Nova Chemicals, LyondellBasell, Phillips 66, DCP Midstream, ExxonMobil, Shell, Vertex Energy, Solvay, TotalEnergies, Origin Materials, EnerSys, K+S, Aramco, Sumitomo, Trinseo, Huhtamaki, IMCD, Idemitsu Kosan, Sibur, Sekisui Chemical, Capstone Green Energy, Repsol, Amcor

Daily Chemical Reaction

Desert Rose – US Drought Supportive Of Crop Prices, Commodity Chemicals Remain In A Flood Of Supply

Key Points:

  • Supportive indicators for crop price strength create a positive picture of farm input demand in future periods, which we view as constructive for fertilizer and agricultural equities into 2H23.
  • Global petrochemical markets continue to face oversupply amid tepid demand, and we flag the weakness in Asia ethylene prices as a risk for North America (and Europe) derivative prices.
  • US natural gas and USGC ethane prices have increased WoW relative to Brent Crude and Ex-US naphtha – a trend that favors Asia producer costs and implies margin pressure for US producers.
  • We discuss COP28 skepticism, critical material shortages, and fringe fuels, arguing that many energy transition constraints are not fully understood and lack adequate industry appreciation.
  • The anticipated recovery in Chinese demand in 2023 has missed most targets, and we highlight the Cabot Corporate business update and multiple global market indicators supporting this view.

See PDF below for all charts, tables and diagrams

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