August & Everything After – North American Chemical Producers Benefit from Improved Cost Positions in July; At A 2H24 High?

The Weekly Catalyst

August & Everything After – North American Chemical Producers Benefit from Improved Cost Positions in July; At A 2H24 High?

• Polymer Market Trends: North American polymer production margins, on average, rose WoW, helped by export market support and an improved cost position. US spot PE integrated margins are near a YTD high.
• Chemical Market Trends: US ethylene and propylene prices held up WoW, following strength since the start of the year amid outages and rising derivative demand, and base chemical prices rose in Asia relative to Europe.
• Feedstock Market Trends: USGC ethane prices led global feedstock cost declines WoW, falling considerably relative to Ex-US naphtha values. US natural gas prices declined relative to Brent Crude oil values WoW.
• Agriculture Market Trends: Crop prices, following weakness for most of July, held their ground last week. Western ammonia prices rose last week while US production costs declined, a plus for producers.

Exhibit 1 – Chart of the Day: US integrated spot ethylene production margins hit a YTD high last week, helped by the drop in domestic spot ethane costs relative to more support in Europe and Asia average naphtha production costs.

Source: Bloomberg, C-MACC Analysis, January 2024