Daily Chemical Reaction
- The chemical sector 2Q23 reporting season will get fully underway next week – the commodity chemical producers face the challenge of keeping sentiment up while fundamentals are declining.
- USGC ethane and US natural gas closed the week higher relative to Brent Crude and Ex-US naphtha. Spot ethylene production margins are now negative across all major global regions.
- We take a more constructive view of specialty chemical producers relative to the commodity sector, as it is seeing supply chain health improve and higher margins due to raw material relief.
- Despite the underperformance in Fertilizer and Agricultural chemical equities YTD, we hold a broadly positive view of on-farm demand and foresee capacity rationalizations ahead in 2H23.
- We discuss increasing sentiment toward the industrial sector, which we partly link to some thinking that conditions are unlikely to get much worse – we argue that it definitely could do so.
See PDF below for all charts, tables and diagrams