Daily Chemical Reactions

China Exports Deflation! Western Chemical Cost Declines May Not Outpace Product Price Declines for Many
December 7, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
Chevron, ExxonMobil, Shell, Nova Chemicals, Huntsman, Covestro, Trinseo, Enterprise Products, Nan Ya Plastics, NextChem, Linde, Dow, Clariant, Ecopol, Glencore, AkzoNobel, Pertamina, Equinor, Cepsa, C2X, Albemarle, Tinci, Lummus, NET Power, Woodside, Santos, CATL, Duke Energy, Siemens Gamesa, Republic Services, Orsted, Aramco, Element Solutions, Dollar General, McKinsey, Stellantis, Tesla, Volkswagon, Walmart

Daily Chemical Reaction

China Exports Deflation! Western Chemical Cost Declines May Not Outpace Product Price Declines for Many

Key Points

  • 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

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