Daily Chemical Reaction
Recent Global Chemical Feedstock Shifts Could Expedite US Ethylene Projects, Delay Ammonia
- General Thoughts: Global natural gas prices continued their descent this week, while crude oil markets reflected strength, a more positive development for North American ethylene producers than its ammonia producers.
- Supply Chain/Commodities: We discuss the Yara 4Q23 report, its constructive view of fertilizer markets, and benefits from cost relief – we do not expect as positive of a view from North American producer reports next week.
- Energy/Upstream: Brent crude oil prices rose this week relative to US natural gas to reflect a five-year relative high, and apart from a few months in 2012, this price ratio reflects nearly a 44-year high this week.
- Sustainability/Energy Transition: We discuss global clean fertilizer market development views, gov’t incentives set to benefit US hydrogen producers, and the development of the PHEV market relative to the EV market.
- Downstream/Other Chemicals: We highlight the weakness in US corn prices this week, US trade deficits by country, showing the one with China as the largest, and global economist consensus views of GDP growth in 2024.
Exhibit 1: Global natural gas prices have collapsed relative to their 2023 average – this is not the case for crude oil.
Source: Bloomberg, C-MACC Analysis, February 2024
See PDF below for all charts, tables and diagrams