Weakening Durable Goods Demand Is A Major Chemical Sector Risk, Lifts Oversupply Concerns

Companies Mentioned: Chemours, DuPont, Arkema, Covestro, Clariant, Chart Industries, Air Liquide, AdvanSix, Wanhua Chemical, Nippon Paint, Ecovyst, Godrej Industries, Sabic, Sinopec, Syngenta Group, Nutrien, BP, Cheniere (LNG), Eni, Equinor, Excelerate Energy, ExxonMobil, Chevron, Glencore, Iberdrola, New Fortress Energy, Shell, Shenhua, TotalEnergies, Woodside, 245Recycle, Neste, Apple, Cefic, BYD, Evergy, Fisker
Commodities Mentioned: Acetone, PVC, Poly Films, LDPE, Lithium, MTBE, Polypropylene, Triethylamine, Polyethylene, Crude Oil, Natural Gas, Hydrogen, Carbon, rPET, Ammonia, Biomethane

Key Findings

General Thoughts: US personal consumption expenditures for durable and non-durable goods declined in January, while YTD domestic chemical production, on average, is higher, indicating that more products are moving abroad.
Supply Chain/Commodities: We comment on Chemours following notice of its 10-K filing delay and management shake-up; industrial gas strength and Chart Industries; and flag three European chemical company 2024 outlooks.
Energy/Upstream: NW Europe and Asia natural gas prices have returned to mid-2021 levels relative to US natural gas, and we also note that Qatar led the global market in new LNG contracts in 4Q23, outpacing US growth.
Sustainability/Energy Transition: We discuss Next Fortress Energy’s views of LNG being consumed as a power generation source to help balance markets amid surging demand and renewable supplies unlikely to keep pace.
Downstream/Other Chemicals: We flag a lessening upward momentum in ocean freight rates between China and the US and Europe after their recent surge, Baltic Exchange Freight Index shifts, and North American rail traffic.