Daily Chemical Reaction
I Don’t Need You Now – 2H23 Chemical & Agriculture Price Hikes Depend On Supply Cuts, Production Disruptions
- North American chemical and grain rail traffic is lower YTD in 2023 amid moderating demand and shifting global trade patterns – both markets depend on supply cuts to bolster 2H23 prices.
- Petrochemical production capacity in North America has increased in 1H23 relative to 1H22 and 1H21 levels, but operating rates remain under pressure to keep inventory growth in check.
- US crop prices remain elevated compared to pre-covid levels, though we find growing concern with shifting demand and trade creating the need for supply cuts to increase crop prices in 2H23.
- BASF cuts its 2023 profit view, adding to the growing list of global chemical producers missing expectations, and we find more sector uncertainty than confidence surrounding a 1H24 advance.
- China’s June exports fell at their fastest pace since February 2020, which we view with concern as it indicates weakening global demand. Price inflation faces downward pressure globally.
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