Fall Approaches: Global Commodity Chemical Prices Ready To Slide On Production Upticks Amid High Prices, Lower Costs

Daily Chemical Reaction

Fall Approaches: Global Commodity Chemical Prices Ready To Slide On Production Upticks Amid High Prices, Lower Costs

Key Findings

• General Thoughts: We think recent factors favoring global commodity chemical price support will lessen in late 3Q24 and into year-end, and absent a major disruptive event, such as a USGC hurricane, spot prices will likely fall.
• Supply Chain/Commodities: We discuss US spot ethylene and propylene prices support amid domestic outages that should dissipate by year-end and the recent weakness in European (and Asian) chemical production costs.
• Energy/Upstream: We highlight recent declines in Brent crude oil and Ex-US natural gas prices relative to US natural gas levels and flag recent weakness in European naphtha values relative to regional LPG prices.
• Sustainability/Energy Transition: We positively view Bank of America funding for a carbon capture project based on future tax credits as it relates to the build-out of this industry and provide views on other sector trends.
• Downstream/Other Chemicals: We discuss a recent uptick in the US Dollar following its slide to a year-to-date lower relative to other major foreign currencies and flag a negative sentiment trend among European automakers.

Exhibit 1: Global spot ethylene prices have surged higher mid-year amid supportive feedstock values and production issues; however, absent more unplanned events, prices are set to drop (potentially sharply) into year-end.

Source: Bloomberg, C-MACC Analysis, September 2024

See PDF below for all charts, tables and diagrams