Daily Chemical Reactions

High Crude Oil Prices & Chemical Price Volatility Exposes & Threatens Those Without Integration
March 22, 2024
Commodities Mentioned:
Ethylene, Propane, Polypropylene, Styrene, NGLs, Crude Oil, LNG, Natural Gas, Carbon, Hydrogen, Copper, Nickel, Lithium
Companies Mentioned:
Phillips 66, Braskem, Petrobras, ADNOC, Eastman, Google, LG Chem, Lifezone Metals, Next Wave, Atlantic LNG, CNOOC, TotalEnergies, Aramco, Dow, Oxy, Microsoft, Repsol, Apple, FedEx, NIKE

Daily Chemical Reaction

High Crude Oil Prices & Chemical Price Volatility Exposes & Threatens Those Without Integration

Key Findings

  • General Thoughts: Volatile global ethylene production co-product prices, amid on-purpose plant outages and unfavorable Ex-US ethylene economics, favors global value-chain integration that will reshape cost curves.
  • Supply Chain/Commodities: We discuss reports of more news that strategic interest in Braskem, highlight the start-up of US ethylene-to-alkylate production, showcasing the US ethylene advantage, and other relevant items.
  • Energy/Upstream: Crude oil price strength in 1Q24 favors higher global chemical prices, and its strength relative to US natural gas is proving positive for its petrochemical production cost advantage relative to Asia and Europe.
  • Sustainability/Energy Transition: The topic of power costs and availability is getting much more airtime and impacting decisions on many fronts, especially hydrogen – permitting delays in the West will hinder progress.
  • Downstream/Other Chemicals: We highlight multiple downstream industry trends worth consideration, including an uptick in US manufacturing, global currency movements, and signs of improving Europe business conditions.

Exhibit 1: US ethylene production based on propane feedstock is yield a higher spot market net co-product credit than in Asia based on naphtha feedstock, with a large portion of relative US co-product strength being driven by outages.

Source: Bloomberg, C-MACC Analysis, March 2024

See PDF below for all charts, tables and diagrams

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