Daily Chemical Reactions

Any Way You Slice It – China Holds The Key To 2H23 (& 2024). Upstream Integration Importance Grows!
July 28, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
Chevron, ExxonMobil, OMV, Eastman, Braskem, Arkema, BASF, Bp, Sekisui, Coromandel International, Zeon, Hanwha Solution, S-Oil, Songwon, Chemours, Lotte Chemical, Dow, Infineon, SolarEdge, Methanex, K+S, Honeywell, Elementis, Tronox, Ecopol, Tokuyama, Avient, Clariant, Ishihara Chemical, Mitsubishi Electric, Mitsubishi Power, TotalEnergies, Shell, Hess, Repsol, First Solar, Avangrid, Aramco

Daily Chemical Reaction

Any Way You Slice It – China Holds The Key To 2H23 (& 2024). Upstream Integration Importance Grows!

Key Points:

  • 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.

See PDF below for all charts, tables and diagrams


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