Daily Chemical Reactions

2H24 Improvement Expectations Now Look More Challenging For Some Than Implied By Early Year Views, Take Caution
April 19, 2024
Commodities Mentioned:
Propylene, Crude Oil, Natural Gas, Ethylene, NGL, Ethane, PDH, PGP, LNG, Naphtha, EVs
Companies Mentioned:
PPG, Dow, Nova Chemicals, CF Industries, Celanese, Braskem, BASF, BP, ExxonMobil, Petrobras, SLB, GM, Ford, Umicore, Woodside Energy, ABB

Daily Chemical Reaction

2H24 Improvement Expectations Now Look More Challenging For Some Than Implied By Early Year Views, Take Caution

Key Findings

  • General Thoughts: We discuss PPG 1Q24 results and outlook commentary for 2024 that suggests a weaker 2Q24 but stronger 2H24 than Street EPS expectations, while we see more risk to its 2H24 views than at the start of 2024.
  • Supply Chain/Commodities: We discuss base and intermediate chemical price volatility and why high oil price and reliability issues facing on-purpose production, such as propylene, are challenges for non-integrated buyers.
  • Energy/Upstream: We discuss recent crude oil and Ex-US naphtha price movements relative to US natural gas and USGC ethane, where higher ratios prove positive for the US ethylene advantage but favor tighter co-products.
  • Sustainability/Energy Transition: We discuss the rising project finance headwinds facing many energy transition and clean product growth projects as higher interest rates, delays, and price and incentive uncertainties mount.
  • Downstream/Other Chemicals: We discuss shrinking capital investment in German manufacturing, especially in energy-intensive industries, and highlight global economic indicators painting a broadly mixed picture of health.

Exhibit 1: The challenges facing PPG and the risks surrounding its trends being watched could net to outweigh the positives in 2Q, and its estimated volume and margin improvement later this year are far from sure things.

Source: PPG – 1Q24 Earnings Presentation, April 2024

See PDF below for all charts, tables and diagrams


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