Chemical Market Analysis
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Chemical & Associated Industries
C-MACC has extensive expertise in the chemical and related industries. With a background in both finance and chemistry, we offer services that provide market analysis, news discovery, expert perspectives, and valuable data. Our services are used by corporations and investment firms to gain insights and make informed decisions.
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what we are talking about today
Daily Chemical Reactions
Battling The Bulge – Chemical Markets Battle Oversupply As Higher Project Costs & Demand Risks Attack Energy Transition
Global polymer, critical mineral, and crop prices have fallen from 2022 highs while financing costs and demand uncertainties have risen – a negative trend for global energy transition.
The current setting benefits integrated upstream energy to extend their product chains and take share from less fortified peers – we highlight ExxonMobil and a few of its growth initiatives.
We flag Deere 4QFY23 results, highlighting less farmer demand for new equipment amid lower crop prices and higher financing costs, and discuss why our ammonia view remains constructive.
Critical minerals supporting the energy transition have seen prices decline in 2023, and risk has risen for related growth projects based more on higher demand than risk-adjusted economics.
We discuss the rise in interest rates in the US and Europe relative to China, adding to Western manufacturer headwinds, the US existing home sale drop, and European economic headwinds.
Less Gobble, More Wobble – Polymer Prices Weaken As Feedstocks Fall, Supply Rises, Buyer Urgency Bobbles Lower
Higher crude oil prices and outages spurred a polymer price rebound in 3Q23 – many prices are still well above mid-2023 levels despite 4Q oil price weakness and signs of reviving production.
We discuss recent global price trends in polyethylene (PE) and polyvinyl chloride (PVC), as US PE appears more likely to fall further into 2024 than PVC, whose price is now near its YTD low.
We discuss ExxonMobil initiatives in lithium and its integrated push to expand its chemical business, and we show recent VAM margin support in the US helped by falling input costs.
We flag more examples of Western clean energy and material companies highlighting long-term demand optimism, needed supply security, and vague near-to-medium-term return goals.
We discuss Best Buy and Lowe’s results, noting a consumer push toward discounted products, and flag recent trends in gasoline and food prices ahead of the US Thanksgiving holiday.
How The Markets Look
The Weekly Catalyst
Global Chemical Update – Heading Into A Colder Setting
Polyethylene (PE) and Polyvinyl Chloride (PVC) spot prices fell more in the US than abroad WoW, but Polypropylene (PP) values strengthened WoW despite US propylene and Ex-US PP prices falling.
Domestic PP prices will likely see a rising amount of downward pressure relative to current levels into 2024, as domestic upstream outages dissipate and US producers face more Asia competition.
US and NW Europe methanol prices fell WoW relative to Asia, a more negative trend for European producers than in the US. US benzene also declined WoW but remains high relative to Ex-US levels.
weekly sERVICE
Hydrogen Economy Update
Plugging Some Holes: Is There A Way Out Of The Slump
Willingness to pay looks like the major stumbling block when it comes to hydrogen development as production incentives are driving investment in production equipment for which there is no demand.
Demand incentives may be the answer, but this is more taxpayer money – demand mandates may be the better solution and may provide the most economic pathways, but agreement is a challenge.
Small hydrogen projects, while not capital efficient, may be all that market demand needs today, but this leaves the equipment industry with a growing capacity overhang and no path to scale economies.
Otherwise, we question the headlong rush into hydrogen infrastructure in Europe, with many of the billions spent on pipelines likely to be wasted as distributed power and hydrogen evolves.
Valuable insights for critical subjects
Sustainaility & Energy Transition
Rules and Ideals vs Objectives – Should All Plastic Be Recycled?
Not enough consumers want to pay higher prices for recycled polymers, placing a low value on the hydrogen content – could fuel subsidies attract polymer waste?
It seems counter-intuitive, but where recycling costs are very high, hydrogen as syngas may win, especially if it can attract fuel or power-related incentives.
Participants should focus more on all mechanisms to avoid plastic waste and re-use in environmentally and economically optimal ways – more than just recycling.
The green lobby wants plastics eliminated rather than recycled, making recycling incentives appear unlikely – we will likely see more consumer mandates to recycle.
Otherwise, we look at more potential company failures and why Air Products strategy is less popular – we also critique the latest EIA forecast as misleading.
what we are covering
Sunday Thematic & Weekly Recap
Fair Trade! Better China Relationships Help All, but Especially China
Improving relationships with China is imperative to meet energy transition goals globally, but it may worsen competitiveness in the West and enhance other risks.
China’s current significant economic challenges suggest that improving trade relations with the West should be a high priority – this was last week’s message.
But China’s speed to market and much better quality should allow for outsized manufacturing growth versus the West and increased dependence on China.
We cannot solve energy transition challenges without embracing China, but we risk creating national security headaches – Western regulation must change.
2022 C-MACC Coverage of Companies and Commodities
