Daily Chemical Reaction
Business Transparency & Streamlining Activities Rise Amid Low Margins & Calls For Proof Of Value-Chain Emission Cuts
- The recent drop in transportation fuel values has outpaced the decrease in crude oil values, steering attention to chemicals for long-term downstream growth despite its depressed profits.
- Global refinery margins fell to a YTD low last week, and chemical margins remained under pressure – both may rise in 1Q24 but likely stay far below their 2021/22 highs absent outages.
- We discuss the separation of BASF business lines that will increase value chain transparency and the likely strategic rationale of LyondellBasell’s divestment of its Bayport EO assets to Ineos.
- We highlight differences in recent strategic news at Chevron relative to ExxonMobil, estimates of Europe’s battery storage growth, and IEA-estimated global GHG emission trends by country.
- North American (and US) chemical rail traffic reflected support last week, which we think will persist into year’s end, though we expect continued chemical price weakness in the near term.
Exhibit #1: Global (and US) refinery margins hit a YTD low this week, while global ethylene production margins reflect relative strength but remain well below their prior 10-year average.
Source: Bloomberg, C-MACC Analysis, December 2023
See PDF below for all charts, tables and diagrams