Daily Chemical Reactions

Pain Can Be A Good Thing – Harsh 2H23 Commodity Chemical Setting Needed To Drive Rationalizations!
July 25, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
AkzoNobel, Dow, LyondellBasell, Sherwin-Williams, CF Industries, Croda, Stavian, Hexcel, Braskem, Bayer, Ineos, Chevron, ADM, Vertex Energy, LG Chem, Sabic, Herc Holdings, Packaging Corporation of America, Bloom Energy, Valia Energía, TotalEnergies, Kinder Morgan, Advanced Petrochemical, Aramco, EDF, BP, Nucor, Cleveland-Cliffs, Jera, Unilever, Attero, Nestle, PPG, Posco, Hess Midstream, Pulte Homes, Versalis, Pemex

Daily Chemical Reaction

Pain Can Be A Good Thing – Harsh 2H23 Commodity Chemical Setting Needed To Drive Rationalizations!

Key Points:

  • A harsh 2H23 commodity chemical profit setting is needed to drive global restructuring and lift any confidence that 2024 will notably improve – otherwise, current profit outlooks are too high.
  • Street profit expectations will likely reset lower for 2H23 with corporate handholding, but most want to paint a better view of 2024, setting a high bar/limiting out-year estimate revisions.
  • Commodity chemical industry oversupply is a positive for non-integrated specialty chemical producers – we anticipate that this chemical sub-sector will outperform commodities in 2H23.
  • We continue to foresee most of the commodity chemical industry restructuring developing in Europe and note CF Industries’ decision to permanently close an ammonia facility in the UK.
  • We also display positive US ethanol margin trends, supported by the ADM 2Q report, flag the push from Braskem in bio-polymers, and highlight numerous sector downstream demand trends.

See PDF below for all charts, tables and diagrams

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