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