Daily Chemical Reactions

False Confidence: Do US Polymer Contract Prices Show The “Real” State Of The Market? Unlikely!
June 22, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
Shell, LyondellBasell, Dow, ExxonMobil, Chevron Phillips Chemical, Formosa Plastics, Chevron, OMV, ICL, Ascend Performance Materials, Solvay, Maersk, European Lithium, Richmond Minerals, Piedmont Lithium, Sasol, Topsoe, TotalEnergies, Altius Renewable Royalties, Enerpac Tool Group, Glencore, KB Home, Cheniere, Equinor, Nutrien, CF Industries, Koch Fertilizer, LSB Industries, Albemarle, SQM, Tianqi, Livent, Freeport McMoRan, BHP, Vale, Ganfeng Lithium, Covestro, Adnoc

Daily Chemical Reaction

False Confidence: Do US Polymer Contract Prices Show The “Real” State Of The Market? Unlikely!

Key Points:

  • US polyethylene contract prices show an upward trend relative to spot values as exports have risen compared to domestic demand, becoming less linked to the actual global market.
  • Contract polymer price premiums are not a new development; realized sales prices tend to be between contract and spot levels, but wider spreads imply increased non-market adjustments.
  • For polymer upgraders, a high input cost contract linked to downstream product prices is a plus for price support and profit upside if significant volume discounts materialize.
  • We show movements in cobalt, lithium, and nickel relative to battery tech, flag ammonia margins compared to non-integrated urea profits, and discuss comments from Adnoc/Covestro.
  • European chemical producer headwinds continue to mount as high prices lure supply from other regions, while global consumer demand indicators suggest growth headwinds remain stiff.

See PDF below for all charts, tables and diagrams

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