As Most North American Petrochemical Producers Celebrate a Better-Than-Expected 1H24, Europe Remains on Edge

Daily Chemical Reaction

As Most North American Petrochemical Producers Celebrate a Better-Than-Expected 1H24, Europe Remains on Edge

Key Findings

• General Thoughts: As North American chemical profits beat expectations in 1H24, restructuring efforts remain underway in high-cost regions – part of the C-MACC team will be in Europe in July to join client business reviews.
• Supply Chain/Commodities: We discuss the revival of discussions between ADNOC and Covestro, strategic activity at OQ Chemicals, and the challenges facing European chemicals, especially those in high-cost regional positions.
• Energy/Upstream: We highlight the surge upwards in Brent Crude values in June from late May lows and that USGC ethane recently declined below US natural gas for the first time in 2024 on an energy-equivalent basis.
• Sustainability/Energy Transition: We highlight news at Air Liquide and ExxonMobil, and we further this discussion by noting the uniquely integrated position of Exxon as it relates to its low-carbon solutions business build-out.
• Downstream/Other Chemicals: We highlight recent ifo survey data pointing to a recent drop in German business sentiment following YTD improvement and discuss recent US housing trends and related mortgage rate shifts.

Exhibit 1: US spot ethylene production based on ethane feedstock is closing 1H24 at/near a YTD high, while other regions struggle with high costs and tepid demand (most of Europe) and high costs and oversupply (most of Asia).

Source: Bloomberg, C-MACC Analysis, June 2024

See PDF below for all charts, tables and diagrams