The Weekly Catalyst

The Weekly Catalyst

Global Chemical Update – Bracing For A Kick To The PP

Key Points:

• The weakness in Brent Crude Oil values relative to US natural gas during the past three months has favored lower polymer prices despite outages working in favor of some, such as polypropylene (PP).
• We view PP as likely to weaken more than polyethylene (PE) and polyvinyl chloride (PVC) from current levels by 1H24, and we view PVC as the most likely to see an outsized early 1H24 price rebound.
• US propane is the most cost-advantaged integrated US ethylene cracker feed, and US PDH margins reflect a 2H23 high and 24% above its 10-year average – both favor propylene and PP production.