Daily Chemical Reactions

Closing Price Gaps, Pressing Cost Advantages – Polymer Producer Relative Advantages Take Center Stage At NPE!
May 10, 2024
Commodities Mentioned:
Polyethylene, Styrene, Propylene Oxide, PVC, Ethylene, Copper, LNG, Crude Oil, Fossil Fuels, Renewable Power, Natural Gas, Hydrogen, CO2, Fuels, Nuclear Power, Hydrocarbons, Coal, Grain, Minerals
Companies Mentioned:
Trinseo, AmSty, Braskem, Monsanto, Sterling Chemicals, LyondellBasell, Lotte Chemical, Oxy, Shell, Nippon Oxirane, Nova Chemicals, ExxonMobil, Dow, Westlake, NuScale, Bloom Energy, X-Energy, Hysata, Lucid, Tesla, Rivian, Fisker

Daily Chemical Reaction

Closing Price Gaps, Pressing Cost Advantages – Polymer Producer Relative Advantages Take Center Stage At NPE!

Key Findings

  • General Thoughts: Global polymer producers rely on their cost position and/or differentiated product solutions to outperform in oversupplied markets – those lacking one or both items face a challenging 2H24/2025.
  • Supply Chain/Commodities: We discuss our general takeaways from NPE, the significant North American and Middle East ethylene cost advantage relative to Europe and Asia, and the recent strength in global copper prices.
  • Energy/Upstream: We compare global average crude oil refinery margins to global average ethylene margins, the integration of energy and chemical value chains, and several drivers of global petrochemical feedstock markets.
  • Sustainability/Energy Transition: We flag two NuScale Power 1Q24 earnings presentation slides showing surging electricity demand growth, which will likely outpace supply – greater imagination is needed to solve this problem.
  • Downstream/Other Chemicals: We highlight North American rail traffic trends, where chemicals are among the strongest sectors YTD, the uptick WoW in global freight rates, and several other relevant downstream indicators.

Exhibit 1: Most polymer spot price spreads between regions are at risk of further tightening than widening in 2H24.

Source: Bloomberg, C-MACC Analysis, May 2024

See PDF below for all charts, tables and diagrams

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