Daily Chemical Reactions

Rebalancing vs. Alignment – Price Concerns Amid Global Rebalancing to Persist, Strategic Alignment Efforts in Focus
April 9, 2024
Commodities Mentioned:
Oxygen, PET, Ammonia, Carbon, Crude Oil, Polyethylene, Phenol, LNG, Coal, Natural Gas, Hydrogen
Companies Mentioned:
CF Industries, Nutrien, LSB Industries, Air Products, Linde, Air Liquide, AirGas, OMV, Shell, ExxonMobil, Mitsui Chemicals, Celanese, Indorama, bp, Perenco, Chevron, PTTEP, PetroVietnam, TotalEnergies, KPI OceanConnect, MSC, Bloom Energy, Oxy, Fortescue, Carbon Direct Capital, Oort Energy, ION Clean Energy

Daily Chemical Reaction

Rebalancing vs. Alignment – Price Concerns Amid Global Rebalancing to Persist, Strategic Alignment Efforts in Focus

Key Findings

  • General Thoughts: Western commodity chemical price support relative to Asia since late 2023 amid logistic issues and supply curtailments could dissipate by 2H24, pinching profits and putting many clean product efforts in check.
  • Supply Chain/Commodities: We discuss why we remain constructive on US ammonia producers despite a likely weak 2024, flag the OMV 1Q24 trading update, and note the completion of strategic actions in acetyls at Celanese.
  • Energy/Upstream: The weakness in Europe and Asia natural gas prices relative to Brent Crude and US natural gas is likely to stimulate downstream production, such as ammonia in Europe, but the benefits may prove short-lived.
  • Sustainability/Energy Transition: We discuss the surge in grid interconnection cues in Europe and the US as clean power projects line up to move their capacity, with delays increasingly putting project return targets under stress.
  • Downstream/Other Chemicals: The freight rates between China and the US and Europe are falling from their YTD highs, suggesting a rebalancing ahead as low-priced Asia products converge with premium-priced Western goods.

Exhibit 1: Western ammonia prices held up into 2Q24; global indicators suggest downward pressure on prices ahead.

Source: Bloomberg, C-MACC Analysis, April 2024

See PDF below for all charts, tables and diagrams


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