Global Chemical Update – Candle In The Wind

The Weekly Catalyst

Global Chemical Update – Candle In The Wind

Key Points:

• Global polymer prices, on average, step lower WoW relative to feedstocks, pushing chemical sector profit lower WoW. We discuss why a near-term sector profitability rebound is unlikely.
• Despite a weak near-term chemical sector profit setting, we add to views put forth in our Sunday research discussing the push among oil and midstream energy companies to expand in this area.
• USGC ethane values held up WoW relative to Ex-US naphtha values WoW. However, US natural gas prices significantly rose compared to Brent Crude WoW, suggesting a flatter global chemical cost curve.
• Macro indicators for farm-input sellers showed support WoW, as corn, soybean, and canola prices held up WoW. Ammonia values also showed support but lower margins due to higher natural gas costs.