Global Market Analysis

We Have A REC For You – Do Not Count On US Natural Gas Demand Falling From Grace!

August 15, 2024

Companies Mentioned: Kinder Morgan, TC Energy, CF Industries, Issaquena Green Power, Pilbara Mineral, Canter Resources, Indian Oil, Lithium Americas, Navigator, BP, Coterra, Venture Global, Next Decade, Amazon, Polestar, Tesla, RWE, Meta, Google, Microsoft, Alphabet, Hapag-Lloyd, Walmart
Commodities Mentioned: Ethylene, HDPE, Natural Gas, Plastics, Renewable Power, Waste, Lithium, Batteries, LNG, Renewable Energy, Carbon, EVs, Hydrogen

Daily Chemical Reaction

We Have A REC For You – Do Not Count On US Natural Gas Demand Falling From Grace!

Key Findings

General Thoughts: US (and global) power demand growth expectations continue to swell and put supply efforts in a challenging position, favoring more natural gas in the power mix and emission reduction efforts around it.
Supply Chain/Commodities: We discuss the recent US spot ethylene price surge in the US relative to Europe and Asia, the plastics industry losing the PR war despite supportive science, and lithium views from recent reports.
Energy/Upstream: We discuss the pluses and minuses of cheap US natural gas, as it is a significant driver of the global cost advantage seen across many domestic industries, but higher values in Europe and Asia also attract it.
Sustainability/Energy Transition: We discuss renewable energy certificates (RECs) used as a path for energy consumers, such as tech and industry, to offset carbon emissions and why substantial REC demand growth is likely.
Downstream/Other Chemicals: We highlight recent weakness in global container freight rates, though still much closer to YTD highs relative to their lows in most markets and favorable 2H24 demand views from global shippers.

Exhibit 1: US Lower 48 state electricity consumption of natural gas reflects an upward trend during the past ten years, and the surging demand for domestic electricity favors more than less natural gas consumption.