Daily Chemical Reaction
- Chemical sector 2Q23 updates highlighted continued weakness in 2H23, with many cutting profit outlooks – though some anticipate a strong 2024, most estimates are likely too high.
- Chinese commodity chemical growth is a primary culprit of global oversupply in 2023, and the inflow of discounted Russian crude, cutting its chemical feedstock costs, is likely a key driver.
- Commodity markets will likely stay oversupplied in 2024, highlighting global risks with China and pushing Western producers more toward integrated models relative to non-integrated ones.
- Downstream, derivative chemical producers generally envision a similar 2H23 setting relative to 1H23, but most count on raw material, which may be put at risk if energy prices increase.
- Global inflation headwinds have moderated, and macroeconomic expectations for 2H23/2024 could prove “less negative” than some expect, but we are yet to factor in notable improvement.
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