Daily Chemical Reaction
Cracking the Brazil Nut: Braskem Value In Doubt If Trade Continues, Similar Issues In Europe & Asia Ex-China
- Many European, Latin American, and Asia Ex-China chemical producers will face rising profit risks in 1H24 due to lower-priced Chinese competition and cost advantages in North America.
- Western polymer prices fell WoW but are notably higher than their 2023 lows, incentivizing the return of production, which we think will work toward global market oversupply in 1Q24.
- Crude oil prices rose in 3Q23 but have fallen, as has US natural gas, from 3Q highs, but Europe natural gas is higher on this basis. Alberta natural gas remains at a discount to Henry Hub levels.
- Dow pushes forward with its Path2Zero clean petrochemical project development in Canada, which is not without risk but looks better economically fortified than many competing projects.
- We discuss Germany facing the threat of increased deindustrialization in 2024 and German export product expectations in November and highlight US light vehicle and home sales trends.
Exhibit #1: Global polyolefin margins modestly declined WoW, led lower by falling prices.
Source: Bloomberg, C-MACC Analysis, November 2023
See PDF below for all charts, tables and diagrams