January Stars – Early-Year Demand Remains In Question, Global Cost Positions Stay In Focus

Daily Chemical Reaction

January Stars – Early-Year Demand Remains In Question, Global Cost Positions Stay In Focus

Key Findings

• General Thoughts: We argued that ammonia prices had returned to a holding pattern following their rise in 2H23 – demand-driven upside risk looks limited in the near term, but we hold a constructive long-term view.
• Supply Chain/Commodities: Weakness in Ex-US natural gas prices has favored lower ammonia and Chlor-alkali chain prices in 1Q24. At the same time, Ex-US ethylene production costs have not seen similar weakness.
• Energy/Upstream: We discuss the significant production growth pushing up North American oil and natural gas exports, and whether US energy outflows will disrupt global energy markets in 2024.
• Sustainability/Energy Transition: We discuss the push to curb single-use plastic to eliminate waste and argue that waste management, not plastic, is the enemy. We also discuss changes for shipping fuels and SAF in 2024.
• Downstream/Other Chemicals: We discuss the Radius Recycling business update, the Lindsey outlook on Agriculture irrigation equipment, as a glimpse into farmer capital spending trends, and global freight rates.

See PDF below for all charts, tables and diagrams