Global Market Analysis

Prices In China Deflated In 4Q23 – Western Price Inflation Must Be Considered Globally!

January 12, 2024

Companies Mentioned: American Lithium Corp., Hanwha Solutions, LG Chem, Borealis, IFF, Mitsubishi Chemical, HB Fuller, Aramco, LyondellBasell, PQ, Lanxess, TotalEnergies, Lummus, Chesapeake, Southwestern, LNG, Glenfarne, Sinopec, Hertz, Tesla, EET Hydrogen, Borouge, Arkema, AkzoNobel, Enbridge, Polestar, Marubeni, Indorama, IHI, Idemitsu Kosan, Rayonier, Thyssenkrupp Uhde, Polestar, BYD, Stellantis, ABB, Airbus, Bank of America, Burberry, BlackRock
Commodities Mentioned: Polymers, Oil, Natural Gas, Ethylene, Naphtha, Caustic Soda, Crude Oil, Hydrogen, Ethanol, Carbon

Daily Chemical Reaction

Prices In China Deflated In 4Q23 – Western Price Inflation Must Be Considered Globally!

Key Findings

General Thoughts: US and Europe price inflation slowed in 2H23, while prices in China fell to show a YoY decline in 4Q23 – the global price setting is favorable for consumers and China exports but not Western manufacturers.
Supply Chain/Commodities: The US PPI for Plastics Resins & Materials declined in 2023, as did its inventory-to-shipment ratios, as domestic producers managed domestic demand and stiffened export market competition.
Energy/Upstream: Brent crude oil and US natural gas prices have increased in the first two weeks of 2024 for different reasons, and higher energy prices could translate into more-than-expected end-product price support.
Sustainability/Energy Transition: US ethanol prices (and margins) have declined notably into 2024, and gov’t policy may come to the rescue. We also shift gears to discuss green hydrogen costs and European carbon prices.
Downstream/Other Chemicals: We compare US CPI to PPI trends, highlight recent strength in the US Dollar, the risk outsiders see in the US in 2024, and discuss the re-routing of freight due to Middle East issues.

Exhibit 1: Western consumer price inflation slowed in 4Q23. However, consumer prices in China declined, reflecting a still wide gap between prices in the West and China – a plus for consumers but not for manufacturers.