Message In A Bottle – US Polymer Markets Set To Weaken; Supporting Overly Optimistic Views Is Not The Right Move

Daily Chemical Reaction

Message In A Bottle – US Polymer Markets Set To Weaken; Supporting Overly Optimistic Views Is Not The Right Move

Key Findings

• General Thoughts: The US S&P 500 commodity chemical sector index will unlikely outperform the S&P 500 chemicals index in 2H24 due to eroding fundamentals and profit expectations absent a significant weather event.
• Supply Chain/Commodities: We discuss the benefits of the recently launched C-MACC/PXi polymer pricing service for the investment community and flag a few upstream chemical views that could prove positives for specialties.
• Energy/Upstream: We discuss the strength of natural gas prices in Europe and Asia relative to the US in May, why this benefits domestic ammonia producers relative to their peers abroad, and other chemical feedstock trends.
• Sustainability/Energy Transition: We highlight a few takeaways from C-MACC founding partner and Issaquena Green Power CEO Graham Copley, who attended a US energy conference this week targeting various topics.
• Downstream/Other Chemicals: The China manufacturing PMI contracted in May, missing expectations and lifting concerns for its economic advance, with the bull case falling back to the increased potential to spur gov’t stimulus.

Exhibit 1: The US S&P commodity chemical and Fertilizer & Agricultural Chemical equity indexes have outperformed the overall S&P 500 Chemical Index YTD, though all S&P 500 Chemical sectors have underperformed the S&P 500.

Source: Bloomberg, C-MACC Analysis, May 2024

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