Daily Chemical Reactions

2H24 Chemical Sector Outlooks Mostly Reflect Positive Expectations; Upside Risk Is Low For Most
May 3, 2024
Commodities Mentioned:
PGP, PP, Propylene, Benzene, Crude Oil, MDI, Polyurethane, Nylon, Ethylene, Propane, Natural Gas, Ethane, NGLs, Naphtha, Hydrogen, Renewable Power, rPET, Polyethylene, Corn, Soybean, Canola
Companies Mentioned:
Linde, Huntsman, AdvanSix, Wanhua Chemical, Ineos, Lotte Chemical, CF Industries, Corteva, Nutrien, Dow, SABIC, Cheniere Energy, ConocoPhillips, Chevron, Air Products, TotalEnergies, Shell, Brookfield Renewable, Microsoft

Daily Chemical Reaction

2H24 Chemical Sector Outlooks Mostly Reflect Positive Expectations; Upside Risk Is Low For Most

Key Findings

  • General Thoughts: Most global chemical sector outlooks expect modest business improvement in 2Q24 relative to 1Q, followed by more significant improvement in 2H24 based on demand strength and crude oil price support.
  • Supply Chain/Commodities: We highlight recent movements in US, Europe, and Asia spot propylene and benzene values to show Western premium prices and why any buyer cost relief may be met with lower downstream prices.
  • Energy/Upstream: US spot propane prices have increased relative to US ethane since 2H23, but US propane values have been falling relative to crude oil values – a plus for PDH economics and European crackers able to take LPG.
  • Sustainability/Energy Transition: We highlight hydrogen production efforts after a few corporate updates, rising power purchase agreements (PPAs) for clean electricity, and a few constraints hindering US electricity grid growth.
  • Downstream/Other Chemicals: We discuss US crop price strength WoW, which we view as a general plus for farm input sellers. North American chemical rail volume growth remains among the strongest across AAR sectors YTD.

Exhibit 1: US polymer grade propylene (PGP) spot prices fell MoM in April, pulling domestic contract values lower.

Source: Bloomberg, C-MACC Analysis, May 2024

See PDF below for all charts, tables and diagrams

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