T-R-O-U-B-L-E – Global Chemical Price Weakness Well Known, 2H23 Margin Risk Still Higher Than Most Envision

Daily Chemical Reaction

T-R-O-U-B-L-E – Global Chemical Price Weakness Well Known, 2H23 Margin Risk Still Higher Than Most Envision

Key Points:

• Polymer price weakness relative to 1H23 highs is well known, and most expect a weak market in 2H23. Feedstock cost swings, such as the jump in USGC ethane WoW, are now the wild card.
• We discuss the spat between Olin and Shintech during a period of low profitability, highlight weakness in global methanol prices, and flag more weak chemical sector 2Q results and outlooks.
• US refinery margins have risen from 1H23 lows, and asset utilization rose last week to near the high end of the prior five-year range – a plus for domestic propylene and benzene production.
• We highlight several views of the ExxonMobil acquisition of Denbury but argue that the move is fairly simple – ExxonMobil is adding significant flexibility to its CO2 management capabilities.
• US Fed statistics suggest that supply chain health is high, and falling rate hike concerns amid moderating inflation put downward pressure on the US Dollar – a positive trend for US exports.

See PDF below for all charts, tables and diagrams