Sunday Thematic & Weekly Recap

Global Ethylene – More Now See the Writing on the Wall but Much More Action Needed
April 14, 2024
Commodities Mentioned:
Ethylene, Propylene, Butadiene, Polyethylene, Crude Oil, Natural Gas, Ethane, Propane, Coal, Methanol, EVs, PET, Copper, Nickel, Hydrogen, Ammonia
Companies Mentioned:
ExxonMobil, SABIC, Dow, INEOS, TotalEnergies, LyondellBasell, BASF, Shell, OMV, Borealis, RWE, Goldman Sachs, Siemens Energy, Electric Hydrogen, Bloom Energy, Oxy, Chevron, BP

C-MACC Sunday Thematic and Weekly Recap

Global Ethylene – More Now See the Writing on the Wall but Much More Action Needed

  • ExxonMobil and SABIC announced ethylene closures in Europe will remove less than 0.5% of capacity from a global market that is oversupplied by 25+% and getting worse! Strategies are evolving but need more pace.
  • Widespread closures are likely in Europe, Asia Ex-China and possibly in Latin America. China keeps building and so does India and there remains an economic incentive to keep building in the US – this will take years to fix.
  • The pressure to close in Europe is high, but at some point, Industrial Security issues will be raised and then we will get into protectionist strategies which may keep units running but will keep the value chain uncompetitive.
  • We have been asked by three companies since April 1st to refresh the work that we did on global ethylene 9 months ago – we recognize that budgets are tight and are asking if there is more interest to keep costs low.
  • Otherwise, escalating global security risk only makes the ethylene decisions harder. We also look at falling freight rates, export dumping from China, copper, optimism in hydrogen, and why money hates transition.

Exhibit 1: Losing 1 million tons of capacity is a drop in the bucket of surplus, but rationalization has to start somewhere.

Source: Corporate reports, C-MACC Analysis, April 2024

See PDF below for all charts, tables and diagrams

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