Shutdowns Needed To Quicken Global Chemical Cycle Recovery – Major Cuts in China & North America Unlikely!

Daily Chemical Reaction

Shutdowns Needed To Quicken Global Chemical Cycle Recovery – Major Cuts in China & North America Unlikely!

Key Points:

• Global chemical oversupply will likely worsen into year-end as North America’s cost advantage and China’s unrelenting production push will overtake cutbacks that will likely occur elsewhere.
• We discuss Sinopec 1H23 results and its 2H23 outlook commentary, which anticipates demand improvement in China and continued investment in petrochemicals despite global oversupply.
• We discuss the ExxonMobil 2050 energy outlook, which fits well with our view that many oil & gas majors will likely further integrate downstream beyond transportation fuels into chemicals.
• Recent strength in gasoline and diesel prices has lifted 3Q23 oil refinery profit, with US refinery margins at a YTD high and associated ethanol markets also reflecting support at elevated levels.
• We discuss the supply-driven economy in China relative to a consumer-led one in the US, the strength in US mortgage rates as they are now near 8%, and the recent expansion of BRICs.

See PDF below for all charts, tables and diagrams