Daily Chemical Reactions

Battling The Bulge – Chemical Markets Battle Oversupply As Higher Project Costs & Demand Risks Attack Energy Transition
November 22, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
ExxonMobil, Goodyear, Nutrien, Corteva, FMC, CF Industries, LSB Industries, SQM, BASF, Cepsa, Saipem, Thyssenkrupp Uhde, Johnson Matthey, Orbia, Clariant, Gulf Resources, NuScale, ORNL, Ineos, Sinopec, YLB, Cosmos Chemical, Petrobras, Pertamina, GS Caltex, Hengli Petrochemical, Weilian Chemical, National Petrochemical Company, Siemens Energy, Stellantis, CATL, Enel, ADM, Deere

Daily Chemical Reaction

Battling The Bulge – Chemical Markets Battle Oversupply As Higher Project Costs & Demand Risks Attack Energy Transition

Key Points:

  • Global polymer, critical mineral, and crop prices have fallen from 2022 highs while financing costs and demand uncertainties have risen – a negative trend for global energy transition.
  • The current setting benefits integrated upstream energy to extend their product chains and take share from less fortified peers – we highlight ExxonMobil and a few of its growth initiatives.
  • We flag Deere 4QFY23 results, highlighting less farmer demand for new equipment amid lower crop prices and higher financing costs, and discuss why our ammonia view remains constructive.
  • Critical minerals supporting the energy transition have seen prices decline in 2023, and risk has risen for related growth projects based more on higher demand than risk-adjusted economics.
  • We discuss the rise in interest rates in the US and Europe relative to China, adding to Western manufacturer headwinds, the US existing home sale drop, and European economic headwinds.

Exhibit #1: Global commodity prices are lower relative to the start of 2022, while financing costs and end-consumer demand uncertainties have increased – a negative for energy transition.

Source: Bloomberg, C-MACC Analysis, November 2023

See PDF below for all charts, tables and diagrams


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