Stuck In The Middle With You – European Specialties Hit By High Costs, Low Demand; US Propylene Strength To Fall

Daily Chemical Reaction

Stuck In The Middle With You – European Specialties Hit By High Costs, Low Demand; US Propylene Strength To Fall

Key Points:

• The US spot polymer-grade propylene (PGP) prices have surged higher amid rising crude oil values in 3Q23 and outages – a negative for non-integrated buyers but a positive for sellers.
• Recent crude oil price weakness and notably positive propylene production margins in the US at its PDH units, RG splitters, and propane-fed crackers support a domestic PGP supply response.
• PGP input cost relief will likely develop by 1H24 for non-integrated US buyers – this is unlike the setting for non-integrated buyers of petrochemical feedstocks, such as Lanxess, in Europe.
• We flag Oxy 3Q23 results and discuss its OxyChem unit and the US PVC spot discount relative to Europe, Asia, and Brazil prices – we think US PVC prices currently reflect less risk than PP.
• We discuss a potential breakup of the businesses at Bayer, the latest EIA short-term energy outlook, 2023 profit troubles at PET recycler Unifi, and several macroeconomic health indicators.

See PDF below for all charts, tables and diagrams