Input Costs & Integration Separated Most Chemical Sector 2Q24 Winners from Losers, More of The Same Likely In 2H24

Companies Mentioned: Westlake, Occidental, Formosa, Olin, The AZEK Company, Huntsman, Bayer, Green Plains, The Anderson, Shell, Chevron Phillips Chemical, LyondellBasell, Macquarie, Aramco, Woodside, OCI, Air Products, Linde, ExxonMobil, IAG, Repsol, SunPower, AGCO, Bunge, ADM
Commodities Mentioned: Polyvinyl Chloride, Polyethylene, Ethanol, Styrene, Polystyrene, Ethylene, LNG, Fossil fuels, Crude Oil, Natural Gas, Wind Power, Solar Power, NGL, Hydrogen, Ammonia, CO2, EV

Key Findings

General Thoughts: We discuss Westlake after its 2Q24 business update, which follows our commentary after its June HIP segment teach-in, as longer-than-normal value chains and in-chain flexibility differentiate it from peers.
Supply Chain/Commodities: We highlight volatility in some commodity chemical markets, such as styrene, as global production rebalances and flag several sector business and asset updates, ranging from Huntsman to Shell.
Energy/Upstream: We refute a news article suggesting some, such as Macquarie, should take an either/or approach to traditional vs. clean energy projects – we think a mixture is needed and that this is the right approach.
Sustainability/Energy Transition: We discuss the Woodside move in the US for blue ammonia, noting why we like the idea. We also display US ethanol market trends and flag Green Plains 2Q24 results and outlook commentary.
Downstream/Other Chemicals: We highlight recent weakness in corn and soybean prices, which could weaken further in August before finding support, and high global freight rates proving harmful for domestic exporters.