Kicking The Gas! Global Projects To Export Cheap LNG & Chemical Feedstocks to High-Cost Regions Is Accelerating

Daily Chemical Reaction

Kicking The Gas! Global Projects To Export Cheap LNG & Chemical Feedstocks to High-Cost Regions Is Accelerating

Key Findings

• General Thoughts: The expansion of projects to move natural gas from low- to high-cost regions is accelerating, and so are high-cost chemical producer ambitions to import low-cost-feedstock and add flexibility to their assets.
• Supply Chain/Commodities: US spot ethylene and propylene values have surged higher since mid-year, mostly due to a series of production issues – spot prices for both are down WoW and likely set to fall further by year-end.
• Energy/Upstream: We note takeaways from the Gastech conference, where global LNG trade and the difference between those exporting LNG and those exporting LNG from their own gas production were conversation topics.
• Sustainability/Energy Transition: We discuss stalled hydrogen build-outs in the US using the lack of clarity on 45V as an excuse, the growth in biofuels gaining incremental attention, and US vs. Europe clean-tech incentives.
• Downstream/Other Chemicals: We highlight US stock market performance in the 12 months following the first interest rate cut in each cycle since 1929 and that it typically corresponds with lifting sentiment toward cyclicals.

Exhibit 1: We show average Asia spot integrated ethylene production margins based on naphtha feedstock compared to a rough estimate of Asia ethylene economics based on USGC ethane feedstock – the current benefits are sizable.

Source: Bloomberg, C-MACC Analysis, September 2024

See the PDF below for all charts, tables, and diagrams