Global Market Analysis

As Country-Level Efforts to Support High-Cost Local Production Mounts, Low-Cost Global Plastic Exporters Face Mounting Risk

November 15, 2024

Companies Mentioned: Braskem, ExxonMobil, Chevron Phillips (CP) Chemical, LyondellBasell, Nova Chemicals, PTT Global Chemicals, Unipar, Orlen, K+S, MVP Lithium Partners, ADNOC, Gazprom, Fluor, KBR, Soluna Holdings, Northvolt, Air Liquide, Air Products, Qair, BP, Equinor, Shell, TotalEnergies, Dow, Delian Group, Bloom Energy, Origin Materials, Vestas, Alibaba, Boeing, GM, Unilever, Samsung Electronics, Applied Materials, Hyundai Motor, Nissan
Commodities Mentioned: Polyethylene, Nitrogen, Potash, Polyvinyl Chloride, Crude Oil, Natural Gas, Ethane, Naphtha, Propane, LNG, Naphtha, Polymer, Solar Power, Steel, Aluminum, Ammonia, Renewable Power, Battery

Daily Chemical Reaction

As Country-Level Efforts to Support High-Cost Local Production Mounts, Low-Cost Global Plastic Exporters Face Mounting Risk

Key Findings

General Thoughts: We discuss the risk to global polyolefin exporters in a setting where country-level protectionist policy is mounting to protect high-cost local industry, with efforts seen in Brazil possibly spreading to other areas.
Supply Chain/Commodities: We discuss Brazil’s investigation into whether US and Canadian polyethylene is being dumped into its market. We also flag PVC capacity addition news in Brazil after its polymer import tariff hike.
Energy/Upstream: We discuss the recent drop in crude oil prices relative to natural gas relative to movements in Ex-US naphtha compared to US ethane values – Ex-US naphtha values have trended higher relative to crude YTD.
Sustainability/Energy Transition: We comment on country-level protectionist policy posing a problem for global energy transition, which we will discuss more broadly in our upcoming Sunday thematic focused on global trade.
Downstream/Other Chemicals: We highlight the recent uptick in global freight rates, with outsized strength being seen in container rates for shipping China goods to Europe relative to weakness in rates from China and the US.

Exhibit 1: PTT Global Chemical (or GC) expects an oversupplied global polyolefins market through 2029 and its low-cost positions to help it profitability navigate this period – rising country-level protectionist policies to support local industry, such as the ongoing efforts in Brazil, could offset this benefit and also for low-cost US polymer exporters.