The Weekly Catalyst
North American Commodity Chemical Margins Strengthen In 1Q24 – Will It Last?
- Feedstock Market Trends: The North American natural gas/NGL advantage increased WoW relative to Ex-US petrochemical producers, pushing USGC ethylene spot margins based on ethane feedstock to a YTD high.
- Chemical Market Trends: NW Europe base chemical prices reflected the most notable improvement WoW, with Asia reflecting the most weakness – a development that significantly benefits US exporters to Europe.
- Polymer Market Trends: Western PE prices rose relative to Asia WoW, notably benefiting North American integrated PE producer margins. Global PP values were mostly unchanged, and US spot PP fell below PGP.
- Agriculture Market Trends: Corn prices fell again WoW, pushing implied US farmer income lower and putting downward pressure on fertilizer use estimates. US ethanol margins fell WoW to a YTD low amid ample supply.
Exhibit 1 – Chart of the Day: North American polymer prices showed the largest gain WoW relative to feedstock costs.
Source: Bloomberg, C-MACC Analysis, February 2024