Daily Chemical Reaction
China Exports Deflation! Western Chemical Cost Declines May Not Outpace Product Price Declines for Many
- Global commodity chemical prices are under pressure from the drop in crude oil values and tepid demand – it could result in profit declines for some despite the likely input price cost relief.
- US non-integrated buyers of “heavy chain” chemical inputs, such as benzene and propylene, currently face higher costs than Asia and stiff competition from its low-priced end-products.
- The US ethylene production cost advantage is also exhibited in its lower ethylene prices, which benefits US buyers – the US has cheaper propane than Asia, but more expensive propylene.
- We discuss Chevron’s capex budget plans for 2024, recent developments in global clean energy and sustainability, and the Republic Services integrated recycling and polymer production facility.
- China’s product exports increased in its latest monthly report. However, volume is lifting China export trade value more than price, which has fallen and signals a trend of exporting deflation.
Exhibit #1: US Benzene Prices Drop as Crude Prices Fall and Amidst Weak Demand, but it is also important to note that US spot benzene reflects a significant premium to Europe and Asia.
Source: Bloomberg, C-MACC Analysis, December 2023
See PDF below for all charts, tables and diagrams