Crude Oil Price Support Lessens Polymer Price Downside Risk, Benefits Sustainable Plastic Push

Companies Mentioned: Invista, Ineos, Braskem, Borealis, SABIC, LyondellBasell, ExxonMobil, Formosa Plastics, MOL Group, TotalEnergies, Repsol, Phillips 66, BASF, Ecuador, Enercon, EDP Renewables, Vitol, Chevron, Aramco, Sinochem, Exxon, Aspiravi, Bayer, Chemours, Dow, Oxy, Grasim Industries, Henkel, HIF Global, Idemitsu Kosan, MOL, Kraton, Iberdrola, LG Chem, Mingca, Sinopec, Nikola, Nucor, Mercedes-Benz, Shell
Commodities Mentioned: Propylene, Polypropylene, Ethylene, Naphtha, Crude Oil, Natural Gas, Polyethylene, Hydrogen, Carbon, PVC

Key Findings

General Thoughts: We discuss US avg. spot polypropylene (PP) prices relative to domestic spot propylene (PGP), avg. NW Europe and Asia levels, and global cost-curve indicators limiting US spot price downside risk near term.
Supply Chain/Commodities: US spot polymer-grade propylene (PGP) and Asia spot ethylene prices both increased relative to US spot ethylene YTD, but the Asia-to-US ethylene spread will likely prove more durable in 2Q24.
Energy/Upstream: We highlight movements in USGC propane relative to Asia propane and USGC ethane, flag a few energy market headlines, and provide global chemical feedstock views from our meetings at CERAWeek.
Sustainability/Energy Transition: We discuss growing applause, despite its challenges, surrounding nuclear as a low-carbon energy driver and higher oil prices as a positive for the economics of “greening” chemical value chains.
Downstream/Other Chemicals: We discuss US industrial production and capacity utilization trends, which have trended lower from 2022/23 highs, but allow for a supply response if global demand improves later this year.