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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