September In The Rain: Hurricane Francine Fizzles, Ammonia Still Thrives, & Propane Takes A Dive

Daily Chemical Reaction

September In The Rain: Hurricane Francine Fizzles, Ammonia Still Thrives, & Propane Takes A Dive

Key Findings

• General Thoughts: Our observations and discussions suggest Hurricane Francine was not as disruptive as many feared, and our view of most commodity chemical prices is for them to face downward pressure into year-end.
• Supply Chain/Commodities: We discuss the US ammonia market as producer margins remain elevated. We also flag an ammonia project gaining approval in Illinois to serve farmers, possibly pushing more US supply offshore.
• Energy/Upstream: We highlight the ~20% drop in USGC propane prices relative to roughly a month ago, which has moved in the opposite direction of USGC ethane and could spur more near-term US propylene production.
• Sustainability/Energy Transition: We discuss the sustainability-linked bond (SLB) market, highlighting our latest sustainability research report published earlier today and comment on several other relevant industry trends.
• Downstream/Other Chemicals: We discuss the latest USDA report that frames the potential for US soybean and corn yields to set a record this year, though our medium-term view of crop market tightness remains unchanged.

Exhibit 1: US spot propane dehydrogenation (PDH) margins reflect support WoW, holding levels near YTD highs, as weakness in US polymer-grade propylene (PGP) spot prices was countered by weakness in USGC propane costs.

Source: Bloomberg, C-MACC Analysis, September 2024

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