Daily Chemical Reactions

Could Farming Be Charming? Better Positioned For 2H23 Improvement Than Most Chemical Sectors!
July 21, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
Nutrien, Corteva, CF Industries, PPG, Hexpol, Dow, LyondellBasell, Aramco, Rongsheng Petrochemical, Yansab, Axalta, Chevron, Advanced Petrochemical, Air Liquide, Albemarle, Mineral Resources, H.B. Fuller, Ineos, Lonza, BASF, Mingyang Smart Energy, Indorama Ventures, Nova Chemicals, SLB, Autel Energy, Valero, Matheson Tri-Gas, Oxy, 1PointFive, Kinder Morgan, KKR, Cheniere, Versalis, Bayer, Sensient, Moog, RYAM

Daily Chemical Reaction

Could Farming Be Charming? Better Positioned For 2H23 Improvement Than Most Chemical Sectors!

Key Points:

  • 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

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