Western Commodity Chemical Producers See Margin Tailwinds Rise YTD; Not The Case Downstream!

Companies Mentioned: Lummus, PPG, Dow, SABIC, Sasol, Vulcan Energy, BASF, TotalEnergies, Ineos, Indroma, Lanxess, Mitsubishi Chemical, NextChem, Petronas, Shell, Wanhua, MP Material, Angus Energy, Trafigura, Baker Hughes, BP, CenterPoint, ExxonMobil, Chevron, Hess, Enerplus, Eni, QatarEnergy, Aramco, Technip Energies, Woodside Energy, ArcelorMittal, OMV, Advent Technologies, Amazon, Ami Organics, Arkema, Aquila, Bain & Company, Braya Renewables
Commodities Mentioned: Benzene, Propylene, Ethylene, Acetic Acid, Polystyrene, Lithium, Polyvinyl Chloride, Polyethylene, Propylene Oxide, Phenol, Acetone, Natural Gas, Crude Oil, Hydrogen, Carbon, LDPE, Ammonia, Nylon, Manganese Sulfate, Biofuels

Key Findings

General Thoughts: Western spot propylene and benzene prices have risen to a sizable premium relative to Asia YTD – a plus for Western manufacturers and integrated product makers but an issue for its non-integrated buyers.
Supply Chain/Commodities: We discuss the PPG strategic review of its US and Canadian architectural coatings business and display the strength in US spot benzene and propylene relative to Asia levels and US spot ethylene.
Energy/Upstream: We discuss regional power prices, comparing more growth in the US electricity CPI from mid-2023 through January 2024 relative to the Europe electricity CPI, and we show shifts in US power generation mix.
Sustainability/Energy Transition: We discuss carbon price weakness, such as in Europe, due to lower industrial activity and not due to falling net abatement costs, and further note issues facing the green hydrogen build-out.
Downstream/Other Chemicals: We highlight weak US durable goods orders ex-aircraft and defense for January as supportive of our durable market concerns and an export market sentiment gauge for European manufacturers.