Sunday Thematic & Weekly Recap

Trapped: 2024/5 Offers Significant Opportunity For European Chemicals To Lose a Fortune!
April 7, 2024
Commodities Mentioned:
Ethylene, Carbon, Steel, Hydrogen, Natural Gas, LNG, NGLs, Lithium, Ammonia, Coal, Water, PVC, Stainless Steel
Companies Mentioned:
Enterprise Products, Chevron, SLB, Nippon Steel, US Steel, Navigator, Shell, ExxonMobil, Valero, Albemarle, Aramco, Jera, Westlake, Thames Water

C-MACC Sunday Thematic & Weekly Recap

Trapped: 2024/5 Offers Significant Opportunity For European Chemicals To Lose a Fortune!

  • Beware of a better first quarter! We believe it could set false expectations for the year – especially in Europe and Asia. The oil majors are signaling weaker 1Q margins on lower prices – this helps chemicals temporarily.
  • With China over-investing in everything, not just chemicals, cheap import pressure will drive more aggressive behavior from chemical and polymer buyers in Europe as they try to compete – this will keep margins low.
  • The obvious options to restructure in Europe involve shutdown-related supply deals with the Middle East and North America, but geopolitics will likely hold back decisions, unrest in the Middle East and Trump in the US.
  • We take our monthly look at metals and critical minerals and remain concerned about a reshaping of the lithium market (lower prices for longer) and suggest that Western incentives to find critical minerals won’t work.
  • Otherwise, we look at how the EV price war will trickle down and impact the supply chain, how much blue ammonia could be consumed in coal fired power stations, and why water supply is a growing concern.

Exhibit 1: Abating carbon on European ethylene facilities is expensive, but doing shutdown deals with the low-cost producers has more political risk than in the recent past.

Source: C-MACC Analysis, April 2024

See PDF below for all charts, tables and diagrams


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