Daily Chemical Reactions

Take Me Home, Country Roads – Housing Market and Global Cost Curve Indicators Reflect Support for US PVC Into 2024
December 19, 2023
Commodities Mentioned:
Plastics (PVC, PP, PE, PU, PC, PET, etc.), Clean Energy Minerals, Carbon Dioxide, Hydrogen, Natural Gas/NGLs, Crude/Naphtha
Companies Mentioned:
Westlake, Occidental, Shin-Etsu, Formosa Plastics, Adnoc, OCI NV, Koch Fertilizer, Covestro, Ineos, BP, ExxonMobil, Nippon Steel, US Steel, Fury Resources, Mitsui Chemicals, Livent, Idemitsu Kosan, Grupa Azoty, MEGlobal, Equate, Element Solutions, Denka, Petrobras, Sinochem, Shell, Ionic Mineral Technologies, Air Liquide, TotalEnergies, LyondellBasell, Alcoa, PureCycle, Anaergia, FREYR Battery, Verdant, Azure Minerals, Aker Carbon Capture, North American Helium

Daily Chemical Reaction

Take Me Home, Country Roads – Housing Market and Global Cost Curve Indicators Reflect Support for US PVC Into 2024

Key Points:

  • Falling mortgage rates and loosening but still tight domestic home supply are spurring housing market activity that could extend into 2024 and prove constructive for building material demand.
  • The global PVC market benefits from building and construction growth, US PVC producers are cost-advantaged, and PVC in the US is cheaper than in Europe and Asia, limiting competition.
  • We discuss the ADNOC purchase of ammonia assets, a logical strategic move as it increases the downstream integration of its low-cost feedstocks, and we flag Grupa Azoty PDH/PP plant issues.
  • European natural gas prices have retreated nearly to mid-year 2023 levels in 4Q23, declining relative to Asia, and weak fossil fuel demand is helping lift the EU renewable electricity mix.
  • We highlight the recent US mortgage rate decline, global demographic trends that will likely sway chemical product demand later this decade, and weak German business sentiment in 4Q23.

Exhibit #1: US PVC spot prices to benefit from improving demand and higher prices abroad (Ex. 3).

Source: Bloomberg, C-MACC Analysis, December 2023

See PDF below for all charts, tables and diagrams

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