“It’s Ethylene, Jim, But Not as We Know it!” Starship Enterprise Enabled to Fly Downstream

Daily Chemical Reaction

“It’s Ethylene, Jim, But Not as We Know it!” Starship Enterprise Enabled to Fly Downstream

Key Findings

• General Thoughts: The economic link between chemical feedstock suppliers and chemical producers has always been significant – recent market developments could work to quicken global value chain integration efforts.
• Supply Chain/Commodities: The US ethylene production cost advantage based on cheap USGC ethane feedstock is at one of its highest levels relative to Europe and Asia since 2014 – Europe seems to face the wrath of Khan.
• Energy/Upstream: We highlight crude oil and Ex-US naphtha price developments relative to US natural gas and USGC ethane to display the US advantage, and we also highlight Enterprise Products US NGL production views.
• Sustainability/Energy Transition: We discuss the requirement for reliable (and cheap) power to electrify chemical processes and broader chemical decarbonization efforts, as its challenges lack adequate appreciation by most.
• Downstream/Other Chemicals: We highlight recent North American rail traffic volume trends, showing YTD strength in chemical movements, and highlight movements in the US Dollar relative to major foreign currencies.

Exhibit 1: The North American ethylene chain advantage links to its substantially advantaged ethane relative to Asia and Europe ethylene feedstocks (Ex. 3). Enterprise is in an enviable position domestically and in the export market.

Source: Bloomberg, C-MACC Analysis, April 2024

See PDF below for all charts, tables and diagrams