Daily Chemical Reaction
Western Inflation Has Slowed, But Is Far From Negative –Price Deflation In China Is A Threat To Western Industry
- China appears well positioned to benefit from much lower relative inflation than Europe and the US for the third consecutive year – this development is negative for Western manufacturers.
- Chinese chemical growth is the primary culprit of global oversupply in 2023 – it has limited North American cost benefits and put sizable pressure on Europe and Asia Ex-China profitability.
- We discuss China’s October 2023 consumer and producer product price deflation, 3Q23 results from Lotte Chemical, and recent movements in global petrochemical feedstocks and cost curves.
- The mixture of relatively lower China prices and its sustainability and green energy growth also pose a risk to the Western energy transition, which is desperate for higher prices/project returns.
- We compare US, European, and Chinese PMI postings, highlight North American rail data and related trends relevant to chemicals and associated markets, and discuss other macro trends.
See PDF below for all charts, tables and diagrams