Daily Chemical Reaction
High Crude Oil Prices Favor Commodity Chemical Price Support, A Negative For Specialty Chemical Input Costs
- Chemical sector followers are looking past 3Q23 reports to profit indicators for 4Q and 1H24 – visibility is limited, suggesting crude oil movements will be a primary indicator to gauge health.
- If crude oil prices hold current levels relative to natural gas into year-end, it is a plus for US commodity chemical profits compared to Europe and Asia and limits 2024 price downside risk.
- Specialty producers face the 4Q23 challenge of overcoming higher input costs in a low visibility demand setting that appears unlikely to improve QoQ much more than seasonal in 1Q24.
- The report’s sustainability section focuses on continued issues with offshore wind, the need for COP28 to focus on emission reductions rather than attacking fossil fuels, and battery storage.
- Our downstream demand findings target North American rail traffic, truck cargo freight rates, and movements in the Baltic Exchange Dry Index, combining to paint a picture of ample supply.
See PDF below for all charts, tables and diagrams