Daily Chemical Reaction
Oversupply Serenade: US Chemicals The Best Singer Among Screamers As Asia Moans, Europe Yelps In Pain
- NW Europe and Asia polyethylene and polyvinyl chloride (PVC) spot prices reflect premiums to US levels, a plus for exporting the US cost advantage, but global markets still reflect oversupply.
- US polypropylene prices have fallen relative to NW Europe and Asia, compared to its 2022 and 2021 average relative levels, and we view growing Asian supplies as a risk to Western markets.
- We highlight that US oil, gas, and NGL exports continue to trend higher as a percentage of total demand, which will likely continue, though it will work to lessen the US chemical cost advantage.
- Recycled resin prices reflect downward pressure, which poses headwinds for producers and related investments, given weak virgin resin prices and global consumer demand headwinds.
- The June US consumer price index posting highlights that inflation is moderating, and Asia inflation is falling and below the US. We view Europe as in a much tougher spot than both.
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