Daily Chemical Reaction
European Chemical Producers In The Freezer – Temperature Falling As North America & China Exports Control Thermostat
- Global chemical markets will likely remain oversupplied in 2024. However, the trade balances between regions will likely further shift, with Europe being one of the most troubled global spots.
- We discuss more announced chemical production closures in Europe, start-ups in China, and the ACC outlook for US volume growth, along with flagging news from Petronas and Methanex.
- We highlight the Elliott letter to Phillips 66, our thoughts on the proposed board additions, and their comparison of P66 with refiners, but their lack of a comparison for its chemicals business.
- We discuss the rise in European natural gas prices in 2H23 and high Eurozone electricity prices, which we argue is a headwind for its existing industry and country-level energy transition.
- European bank lending has considerably decreased in 2023 amid higher rates and economic uncertainty, and freight rates suggest EU product supply availability from imports has improved.
Exhibit #1: China benefits from competitive exports and lower relative freight rates to Europe.
Source: Bloomberg, C-MACC Analysis, November 2023
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