Back To The Futures – Implied Chemical Cost Curve Flattens To 2017/18 Levels, Europe Would Continue To Face Biff

Companies Mentioned: Dow, Enterprise Products, Invista, Braskem, Pinnacle Polymers, PPG, OQ Chemicals, Celanese, Oxy, ExxonMobil, Shree Pushkar Chemicals & Fertilisers, Aramco, LyondellBasell, Nova Chemicals, Westlake, Olin, ADNOC, Shell, TotalEnergies, Phillips 66, Chesapeake, Amazon, Deloitte, REPowerEU, Google, Meta, Microsoft, Salesforce, Yara
Commodities Mentioned: Propylene, Ethylene, Propane, PDH, Polypropylene, PVC, Polymers, Crude Oil, Natural Gas, Ethane, LNG, Hydrogen, Ammonia, SAF

Key Findings

General Thoughts: We discuss chemical feedstock futures markets and implied chemical cost curve developments through 2025 to loosely gauge sector sentiment toward global fundamentals and growth capital deployments.
Supply Chain/Commodities: We highlight US spot ethylene and propylene values and futures prices through 2025, considering current global spot prices and the substantial US ethylene chain advantage relative to Asia and Europe.
Energy/Upstream: We look at Brent Crude and US natural gas, propane, and ethane prices and their futures prices through 2025, which suggests lower global chemical prices and downward US petrochemical margin pressure.
Sustainability/Energy Transition: We see power and offtake challenges keeping many clean product projects, such as hydrogen, from positive FIDs, and challenges limiting timely electricity grid growth lacking appreciation.
Downstream/Other Chemicals: Despite recent cost relief, we discuss the drop off in European manufacturer competitiveness as its mature domestic markets and limited export capabilities keep its industry in a tough spot.