Steep Global Cost Curve & China Demand Strength Will Limit US Ethylene Chain Profit Risk – If They Persist!

Daily Chemical Reaction

Steep Global Cost Curve & China Demand Strength Will Limit US Ethylene Chain Profit Risk – If They Persist!

Key Points:

• US and Asia polymer prices have risen YTD but for different reasons. A steep global chemical cost curve and rising China demand will help limit US margin losses as its production returns.
• We discuss US polyethylene (PE) contract developments relative to global spot market levels, flag recent movements in a few US monomers, and display current US propylene contract trends.
• We highlight recent weakness in Asia and Europe natural gas values, though they remain much higher than US levels, and current support in Ex-US naphtha values relative to USGC ethane.
• We highlight the need for low cost and reliable clean energy, we discuss why hydropower and nuclear are more reliable than wind and solar due to their higher ongoing capacity factors.
• We discuss optimistic views toward a post-covid China economic revival in 2023, which the recent China PMI reading supports, and we flag market signals taken from a few retail reports.

See PDF below for all charts, tables and diagrams