Daily Chemical Reactions

Soul To Squeeze – More Global Production & Tighter Spreads Ahead, Europe Reflects The Most Regional Risk
September 20, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
Dow, Ineos, ExxonMobil, Origin Materials, BASF, Henkel, Sinopec, Vopak, Chevron, Trafigura, MOL, Orica, Zeon, EQT, New Fortress, Unipec, TotalEnergies, Adani Green Energy Ltd, European Energy, LanzaJet, Technip Energies, Toray Industries, Shell, SABIC Agri-Nutrients, Sunnova, Danimer Scientific, Chevron Phillips Chemical, M. Holland, Scale Microgrids, Cabot Corporation, Petronas, SABIC, Equinor, General Mills, Aramco, Elementis, Enbridge, Glencore, Air Liquide

Daily Chemical Reaction

Soul To Squeeze – More Global Production & Tighter Spreads Ahead, Europe Reflects The Most Regional Risk

Key Points:

  • Global base chemical values have increased with crude-oil-based feedstocks in 3Q23. However, polymer values have risen more relative to monomer values in Asia than in the US and Europe.
  • We view the recent support in Asia polymer values as negative for Western markets, especially Europe, as it favors Asian producers staying on course to boost supply in late 2023 and 2024.
  • The stage appears set for Western polymer-to-monomer spread contraction in late 2023. Due to its feedstock cost advantage, North American producers are best poised to weather this storm.
  • We discuss the global reliance on China rare earth materials as part of its energy transition and the rapid development of solar and wind, driving up net project costs rather than deflating them.
  • We highlight recent movements in the Baltic Exchange Dry Index and August US home starts and mortgage rate trends and discuss challenges with sourcing skilled labor and related inflation.

See PDF below for all charts, tables and diagrams

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