Daily Chemical Reactions

Got Me Under Pressure – Oil Price Strength Negative For European Chemicals, Less So For Global Supply
September 12, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
Nova Chemicals, Methanex, Dow, LyondellBasell, ExxonMobil, Petronas, Formosa Plastics, Hengli Petrochemical, BASF, Lummus, MOL, BP, GEVO, Maersk, Amazon, Oxy, Hanbang Petrochemical, Trinseo, OPaL, TotalEnergies, Petrobras, Covestro, ADNOC, ProAmpac, Evonik, Repsol, Williams, Unipec, CarbonCapture Inc., Braskem, Tigo Energy, Berry, Lyten, SABIC, Pacur, Ørsted, Fortescue, Chevron, Tata Steel

Daily Chemical Reaction

Got Me Under Pressure – Oil Price Strength Negative For European Chemicals, Less So For Global Supply

Key Points:

  • The global chemical industry reflects too much capacity in most products – the steepening of the chemical cost curve is shifting production to low-cost regions, but net supply is less at risk.
  • European chemical producer profits have worsened in 3Q23 as crude oil prices have increased costs and demand remains tepid – we foresee more restructuring announcements into year-end.
  • Rising crude oil values relative to natural gas suggest significant feedstock benefits for North American and Middle East chemical producers – we view European producers as most at risk.
  • We discuss Amazon’s commitment to the Oxy DAC project, which is notable, as these projects cannot work with just the 45Q incentive, and the ability to sell high-value credits is critical.
  • The Chinese yuan has further depreciated relative to the US Dollar, which we assess as a plus for Chinese exports in a setting where demand is failing to keep pace with supply growth.

See PDF below for all charts, tables and diagrams


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