Soul To Squeeze – Global Polyolefin Market Oversupply to Worsen In 4Q24, Will Crude Oil Prices Rise to Curb Production?

Companies Mentioned: Dow, ExxonMobil, LyondellBasell, Nova Chemicals, Braskem, Pinnacle Polymers, ChemOrbis, Shell, Wanhua, OMV, MOL Group, Woodside, Chevron, Kinder Morgan, AP Moller, General Mills, Home Depot, Berry Plastics, Neste, Coca-Cola, L’Oréal, PepsiCo, TerraCycle, Yum! Brands, Unilever, WM, Taco Bell, APackaging Group, Starbucks
Commodities Mentioned: EVC, PP, PE, Ethylene, Propane, PVC, Virgin Plastic, Green Plastics, Steel, Aluminum, Copper, Crude Oil, Natural Gas, Ethane, LNG, NGLs

Key Findings

General Thoughts: Global polyolefin margins have fallen into October, as polyolefin spot prices have moderated while global feedstock costs, most notably in the US, increased – 4Q24 profits will likely be the worst YTD for most.
Supply Chain/Commodities: We discuss US spot polyethylene (PE) and polypropylene (PP) market developments following our late September polymer price report and highlight our relevant European and Asian observations.
Energy/Upstream: In 3Q24, we questioned whether the North American and Middle East chemical feedstock cost advantage was as good as it gets in 2024 relative to Europe and Asia. It is likely unless crude oil prices surge higher.
Recycled/Renewable Polymers: We discuss rising brand owner sustainable and circular plastic target pushbacks, the state of supply-side initiatives, and Yum! Brands’ efforts to spur sauce packet waste collection from Taco Bell.
Downstream/Other Chemicals: We flag global freight rate weakness and discuss the European chemical industry’s business development sentiment falling in September, which we think will likely worsen further in 4Q24.