Daily Chemical Reactions

End of June – Commodity Chemical Margins Fell From 1H23 Highs In 2Q23, Further Weakness Likely In 2H23
June 30, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
LyondellBasell, Dow, ExxonMobil, Braskem, TotalEnergies, Borealis, Chevron Philips Chemical, Formosa Plastics, SABIC, Westlake, Air Liquide, BASF, Yara, Lanxess, OMV, Mitsui Chemicals, Pemex, Sinopec, China Three Gorges, IFF, Coromandel International, Avantium, SCGC, H.B. Fuller, Solvay, Chevron, Envision Plastics, Imerys, NextDecade, Vitol, Tetra Technologies, Glencore, Micron, Nova Chemicals, Nike, Plastic Energy

Daily Chemical Reaction

End of June – Commodity Chemical Margins Fell From 1H23 Highs In 2Q23, Further Weakness Likely In 2H23

Key Points:

  • Global commodity chemical production margins ended the June quarter lower than the 2Q23 and 1Q23 averages, setting the stage for a lower 3Q23 (and 2H23) amid oversupplied conditions.
  • North American polymer margins are the highest among the major regions but were also hit by lower prices, with most integrated margins falling notably by the end of 2Q23 relative to its start.
  • Commodity chemical price hikes in 2H23 will prove challenging amid oversupplied conditions – unplanned material outages or a steeper global cost curve will be needed for most to lift prices.
  • Two Chinese producers started green hydrogen production based on solar power in China, and we highlight the impressive speed of Chinese projects relative to many in Western markets.
  • China’s economic data remains troubling. We view government-incentivized renewable power investment as an economic stimulus that does not require higher domestic consumer spending.

See PDF below for all charts, tables and diagrams

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