Daily Chemical Reaction
My Chemical Romance – Oil & Gas Companies Attracted To Downstream Growth, Longer Global Value-Chains
Key Findings
- General Thoughts: We think oil and gas demand will likely stay stronger for longer than many forecasts, helped by chemical market growth, and as appreciation likely grows towards CO2 emissions (not fossil fuels) as the issue.
- Supply Chain/Commodities: We discuss our takeaways from Sinopec and PetroChina business updates that show chemical product export growth and a seemingly lifted focus on global competition amid weak domestic demand.
- Energy/Upstream: We discuss the ExxonMobil 2050 energy outlook, as it suggests chemical demand will be a significant growth driver of oil demand and the cost benefits of feedstock integrated vs. non-integrated producers.
- Sustainability/Energy Transition: We flag Diane Chamberlain being appointed Executive Chairman of Issaquena Green Power, a firm striving to create a much-needed high-capacity-factor, low-cost energy solution for industry.
- Downstream/Other Chemicals: We discuss recent weakness in manufacturer business sentiment and German export markets and why conditions could worsen in 2H24 as other markets target premium European prices.
Exhibit 1: Long-term fossil fuel demand concerns increasingly push oil producers toward chemical markets, despite current non-integrated refinery and ethylene production margins relative to pre-COVID levels telling a different story.
Source: Bloomberg, C-MACC Analysis, August 2024
See PDF below for all charts, tables and diagrams
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