Daily Chemical Reactions

Xi Gon’ Give It To Ya – China Has Low Prices And Is Formidable In Clean Energy, Not Good For The West    
November 17, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
CF Industries, Nutrien, LSB Industries, LyondellBasell, BASF, Flint Hills, BP, Octopus Energy, Enbridge, NextDecade, Evonik, Neste, Mitsui Chemicals, Rare Element Resources, Pertamina, Fortescue, Glencore, GEL, Compass Minerals, SQM, Marathon Petroleum, Unipar, Whitehawk Energy, Chevron, Asahi Kasei, Fuso Chemical, Goodyear Tire, Grasim Industries, Guangxi Huayi Energy, PetroChina, Sinostar, Pembina Pipeline Corporation, Air Liquide, DG Fuels, Fisker, GM, Oxy, Panasonic, Titan Group

Daily Chemical Reaction

Xi Gon’ Give It To Ya – China Has Low Prices And Is Formidable In Clean Energy, Not Good For The West    

Key Points

  • North American chemical producers have a sizable cost advantage relative to Europe and Asia – the benefits of those competing more with ex-US natural gas than crude have risen in 4Q23.
  • We provide thoughts following Chinese and US official meetings this week that appear more constructive for the US than many envisioned – we argue it reflects troubling conditions in China.
  • We discuss polymer plant restarts in China, putting downward pressure on prices, and we flag rubber closures in Europe, causing their butadiene prices to decline while seeking new demand.
  • While the recent China and US official meetings are optimistic about developing clean energy, we think this transition notably favors China relative to the US and its fossil fuel cost advantage.
  • We also discuss falling investment inflows to China, recent US housing data worth considering, and some retailer commentary about slowing demand despite price discounts to lure buyers.

Exhibit #1: The US chemical production cost advantage has risen in 4Q23 for beneficiaries of higher Ex-US natural gas prices relative to the US levels – it hasn’t for those benefiting from higher crude.

Source: Bloomberg, C-MACC Analysis, November 2023

See PDF below for all charts, tables and diagrams

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