The Supply Job: Cost Advantaged US Ethane/Ethylene Exports, Europe SAF Imports, & Global Shipping Fleet Expansions

Companies Mentioned: Navigator Holdings, Enterprise Products, ExxonMobil, Dow, LyondellBasell, Nova Chemicals, Celanese, Nippon Steel, Aramco, Baker Hughes, Woodside, Kosmos Energy, Phillips 66, Sempra, SK Energy, Air Products, NEOM, Point72, The AZEK Company, Deere, Smithfield Foods, Sonoco, Mediterranean Shipping Company, CMA-CGM
Commodities Mentioned: Ethylene, Ethane, Propylene, Polyethylene, Polypropylene, PVC, Natural Gas, Crude Oil, Naphtha, SAF, LNG, E-Fuel, Hydrogen

Key Findings

General Thoughts: The US cost advantages in ethane and ethylene continue to be targeted by consumers in high-cost areas, favoring increased derivative production abroad and the continuation of global oversupplied positions.
Supply Chain/Commodities: We discuss the US ethane and ethylene export expansion update from Navigator and Enterprise, recent developments in global ethylene markets, and shutdowns needed to boost PE operating rates.
Energy/Upstream: US ethane, ethylene, and derivative exports have surged since early last decade, and we frame the significant US ethane-based ethylene production cost advantage relative to naphtha-based production in Asia.
Sustainability/Energy Transition: We discuss SAF use mandates going into effect in Europe, the announcement that SK Energy is shipping SAF from Korea to Europe, and whether SAF is central to the Air Products controversy.
Downstream/Other Chemicals: We discuss the recent surge in container freight rates amid news of potential strikes and related disruptions, considering shipping container capacity growth ahead set to pressure global rates.