US Spot Ethylene & Propylene Margins Strengthened In July, Both To Weaken In 2H24 – Propylene Derivative Prices Most At Risk

Companies Mentioned: LyondellBasell, Covestro, Cepsa, Clariant, DSM-Firmenich, INEOS, Braskem, Lotte Chemicals, Westlake, Dow, Nova Chemicals, ExxonMobil, Chevron Phillips Chemical, Heartland Polymers, Inter Pipeline, OQ Chemicals, Enterprise Products, Navigator, Chesapeake, Freeport LNG, BP, Air New Zealand, BASF, Denali, Walmart, Sam’s Club, Linde, Repsol, IAG, ADNOC, ADM, Corning, McDonald’s, P&G
Commodities Mentioned: Propylene, Polypropylene, Styrene, Ethylene, Ethane, Benzene, Oxo-alcohols, Ethylene, Ethane, Propane, NGLs, LNG, Natural Gas, Crude Oil, SAF, Hydrogen, EV, PET, Wind Power, Solar Power

Key Findings

General Thoughts: US spot ethylene and propylene production margins significantly strengthened in July, and we discuss why we see more risk in US spot propylene derivative prices relative to ethylene derivatives in 2H24.
Supply Chain/Commodities: The North American ethylene chain advantage, in our view, is much more durable relative to propylene, with integrated economics holding less risk than non-integrated economics for propylene.
Energy/Upstream: We highlight recent strength in overseas natural gas prices relative to Brent Crude oil and US natural gas, USGC ethane at a YTD low, and show the still wide price spread between Asia and US spot propane.
Sustainability/Energy Transition: We flag BP EBITDA growth drivers supporting its 2025 guidance and strategic and business shifts during the past 12 months and discuss other relevant global sustainability updates.
Downstream/Other Chemicals: We highlight volume strength by geography at Covestro and Clariant, flag the ADM 2Q24 report showing a crop demand dip and lower crush margins, and discuss other end-market views.