Daily Chemical Reactions

A Gassy Situation – Weak Ex-US Natural Gas Prices May Stink Up Some US Chemical Projects
January 19, 2024
Commodities Mentioned:
Benzene, Phenol, Acetone, Ethyl Acetate, Propylene Oxide, Polybutadiene, Polyurethane, Lithium, Ammonia, Hydrogen, Polyol, Oil, Natural Gas, Ethylene, Naphtha, Ethane, Propane, Propylene, Carbon, Recycled Plastics, PET, Ethanol, LNG, Polymers, Polypropylene, Sodium- ion, Biodiesel
Companies Mentioned:
BASF, Huntsman, PPG, Evonik, Henkel, Petro Rabigh, Hyundai, AdvanSix, Repsol, Syngenta, Alkemy, Umicore, Sumitomo Metal Mining, FPX Nickel, Aarti Industries, Sinopec, BP, Equinor, Petrobras, Shell, Toagosei, Ineos, ADNOC, ALPLA, Eni, LG Chem, RWE, TotalEnergies, Loop Industries, LyondellBasell, Braskem, FKuR Kunststoff GmbH, Google, Exolum, Greenergy, Li-Metal, Lyten, INEOS, Puma, Solaris

Daily Chemical Reaction

A Gassy Situation – Weak Ex-US Natural Gas Prices May Stink Up Some US Chemical Projects

Key Findings

  • General Thoughts: Global natural gas prices have plummeted relative to their average in 2023, with the most notable decline in Ex-US natural gas markets, favoring a production response in some commodity chemicals.
  • Supply Chain/Commodities: While North American ethylene producers continue to enjoy a significant cost advantage, North American ammonia, chlor-alkali, and methanol producers are seeing their advantage shrink.
  • Energy/Upstream: We show US, Asia, and Europe natural gas price trends relative to crude oil, flag support in 1Q24 US refinery margins, though they are lower YoY, and highlight EIA forecasts for gasoline and diesel prices.
  • Sustainability/Energy Transition: We discuss European power prices and challenges with clean energy development, the US DAC market, and a demand breakdown for recycled polymers by end-use sector.
  • Downstream/Other Chemicals: We discuss the PPG 4Q23 report and 2024 outlook, Huntsman and BASF 4Q23 updates, and provide thoughts on North American rail traffic, crop price movements, and US home sales.

Exhibit 1: Global natural gas prices reflect notable declines relative to their 2023 average compared to crude oil.

Source: Bloomberg, C-MACC Analysis, January 2024

See PDF below for all charts, tables and diagrams

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