Daily Chemical Reactions

Price Headwinds Challenge Global Clean Product Rollouts & Chemical Production Margins in Europe and Asia Ex-China
December 13, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
Nouryon, CNOOC, Shell, Dairen Chemical, Formosa Plastics, Innospec, DKSH, BASF, Hy Stor Energy, PTTGC, Mitsubishi Heavy Industries, LSB Industries, Macquarie, Pembina, Sibur, BP, Venture Global, Ineos, SABIC, Linde, Weilian Chemical, Emerald Packaging, Unilever, Aker Carbon Capture, Yara, JERA, Resonac, Glencore, Air Products, Twinza Oil Limited, Hyliion, HyTerra, Nuada, RWE, Standard Solar, TotalEnergies, Trafigura, ABB, Anglo American

Daily Chemical Reaction

Price Headwinds Challenge Global Clean Product Rollouts & Chemical Production Margins in Europe and Asia Ex-China

Key Points:

  • US wholesale prices were unchanged MoM in November, while plastic and material prices held up more than chemicals and allied product values – this price spread will likely tighten in 2024.
  • The price of Singapore naphtha reflects a YTD high relative to Brent Crude, while USGC ethane is near a YTD low relative to US natural gas – a cost curve development favoring North America.
  • Recent weakness in chemical feedstocks suggests lower chemical prices into 2024, with new production in China being of notable concern for Europe and Asia Ex-China producer margins.
  • We argue that clean power hubs are critical to the economic build-out of green hydrogen, flag the 2023 surge in US cooking oil imports from China, and discuss carbon offsets market growth.
  • The ADB estimates China will post the lowest inflation among developing Asia economies in 2024, which we view as a negative for product manufacturers in Asia Ex-China and the West.

Exhibit #1: US wholesale plastic resin & material prices have fallen YTD but reflect relative support to US intermediate chemicals and allied product prices and the overall US PPI index in November.

Source: Bloomberg, C-MACC Analysis, December 2023

See PDF below for all charts, tables and diagrams


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