The Weekly Catalyst
Global Chemical Update – US Ethylene Advantage Faces Crude Ceiling
- Brent Crude oil and US natural gas price movements fail to fully display the jump in the US ethylene production cost advantage relative to Asia and Europe in 4Q23, reflecting nearly a five-year high.
- Global chemical and polymer prices reflect downward pressure in December, led lower by crude oil and seasonally weak 4Q demand – US propylene remains an outlier because of production issues.
- European natural gas prices fell ~19% last week, leading global feedstock values lower and curbing its production cost disadvantage in parts of its chemical industry, such as ammonia, relative to the US.
Exhibit #1 – Chart of the day: The US ethylene production cost advantage based on USGC ethane feedstock has expanded more relative to Ex-US naphtha-based production than the oil-to-gas ratio suggests in 2H23.
Source: Bloomberg, C-MACC Analysis, December 2024
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