North American Spot Petrochemical Margins Further Erode From 1H24 Highs, US Spot PE Prices Face Pressure

The Weekly Catalyst

North American Spot Petrochemical Margins Further Erode From 1H24 Highs, US Spot PE Prices Face Pressure

• Polymer Market Trends: US polyethylene (PE) prices have increased in 2024 relative to their 2023 average and production costs. However, export price weakness and rising costs have trimmed US margins from 1H24 highs.  
• Chemical Market Trends: North American base and intermediate spot chemical prices mostly increased WoW, while Europe and Asia mostly saw price declines, suggesting downward pressure on US chemical export prices.  
• Feedstock Market Trends: US natural gas and USGC ethane prices increased last week relative to crude oil, Ex-US naphtha, and Ex-US natural gas, pinching the still substantial North American feedstock cost advantage.
• Agriculture Market Trends: Crop prices moved higher WoW, while spot ammonia values, on average, mainly were unchanged, with North American producers seeing margin erosion due to higher natural gas costs.

Exhibit 1 – Chart of the Day: Crude oil/Ex-US naphtha price support and much lower North American feedstocks have mostly benefited North American petrochemical producer margins relative to 2023 – will the benefits persist in 2H24?

Source: Bloomberg, C-MACC Analysis, May 2024