Global Weekly Catalyst No. 340

Base Chemical Global Analysis

Global Weekly Catalyst No. 340

• General Thoughts: Rising input costs are separating price gains from earnings, rewarding refiners and feedstock-advantaged producers as cautious customers delay commitments and higher-cost operators reduce production.
• Feedstocks & Energy: South Korea’s reserve review could keep Asian naphtha firmer than cracker margins justify, pushing weaker merchant producers to cut runs before feedstock benchmarks reveal the region’s underlying stress.
• Olefins: Unknown US restart timing may preserve propylene premiums longer than demand can support, leaving coordinated PDH normalization capable of triggering a sharper correction than the current consensus expects.
• Other Base Chemicals: Crude-linked costs and refinery tightness lifted benzene as downstream producers chased higher prices, while higher overseas gas costs pushed methanol higher without delivering a broad margin recovery.
• Agriculture: Lower nitrogen prices are testing whether deferred orders convert before producer leverage fades, as sulfur-driven phosphate curtailments protect pricing but reduce the volume available for earnings recovery.
• Refining & Biofuels: Refinery margins should remain elevated as product output lags crude recovery, lower corn costs, and restrained ethanol production rebuild earnings from near-breakeven levels through late 2026.

Exhibit 1 – Chart of the Day: Tight Supply and Higher Oil-Linked Input Costs Drive Global Propylene Prices Higher.

Source: Bloomberg, C-MACC Estimates, July 2026