Chemical Market Analysis
Focused and RelevantProviding value-added research and strategic consulting services using chemical industry expertise
2022 C-MACC Coverage of Companies and Commodities
what we are talking about today
Daily Chemical Reaction
What’s Your Crude View!? Most Global Chemical Markets Face Oversupply; Higher Crude Provides Price Support
Recent crude oil price strength helped lift global chemical prices amid oversupplied conditions in 3Q23, but absent further improvement, will unlikely to spur prices much higher into 4Q23.
We discuss Braskem’s decision to idle polypropylene (PP) production at a Northeast US facility and why it differs from the recent LyondellBasell closure in Italy, which is less likely to restart.
Following its recent run-up, crude oil prices reflect support relative to US natural gas, but NW Europe and Asia natural gas prices have recently increased – another negative for these regions.
Low virgin polymer prices are a headwind for recycled resin markets, and we highlight LEGO’s recent decision to shift from its R-PET content efforts to evaluate other sustainable materials.
We also discuss significant headwinds facing a European shift away from China as a trade partner, recent relative value movements in the USD, and provide a US crop price update.
Global Chemical Update – Commodity Strength, Higher Specialty Costs
Global commodity chemical prices reflected strength WoW, a positive for North American producer profit relative to Asia and Europe. Non-integrated specialty producers face 3Q cost pressure globally.
We are more constructive of fertilizer and agricultural chemical value support in 4Q23 than the broader global commodity market, partly due to our fewer concerns with the global farm economy.
Global chemical feedstock values declined on average WoW, with USGC ethane falling more than Ex-US naphtha and Brent Crude, mostly mirroring the WoW percentage drop in US natural gas.
Turning Points – Agricultural Chemicals To Face Fewer 4Q & 1H24 Challenges Than Commodity & Specialty Chemicals
Fertilizer and agricultural chemical equities have bounced from recent lows relative to the overall S&P Chemicals index, led by rising underlying commodity prices, such as ammonia.
Commodity chemical equities bounced from YTD lows in early 3Q, partly due to strength in crude oil values lifting export prices, spurring a US production response and price risk for 4Q23.
We are more optimistic about the fertilizer and agricultural chemical market than commodity petrochemicals, as we see fewer end-market demand challenges and less risk with oversupply.
Many mid-year specialty chemical 2H23 profit predictions factored in falling raw material prices, not expecting the surge in crude oil values. This sector is at risk of 2H23 downgrades.
We also discuss US rail traffic data, recent movements in base chemical and feedstock prices, 2H23 trends in lithium values and batteries, and highlight numerous other relevant items.
weekly sERVICE
Hydrogen Economy Update
Panel Takeaways – Hope but Not Enough Cash
C-MACC Hydrogen Weekly Update 12 Panel Takeaways – Hope but Not Enough Cash Weekly Theme: Panel...
Valuable insights for critical subjects
ESG, Recycling & Climate
Peak Oil Debate Is Complex: Policy Backtracking Supports Oil Use
The IEA supply/demand models assume policy can be enacted as stated – the flaw in this approach is that policy could backtrack, and costs are delaying progress.
As noted with the UK this week, as estimates of complying with net-zero goals increase, governments must choose whether to bear the costs or change course.
Cost increases that we are seeing to meet decarbonizing goals in the West are driven by hard-to-fix labor and materials issues as well as higher borrowing costs.
As we have noted in prior work, delays in the West impact hydrocarbon needs but also allow China to gain an increasing experience edge and lower costs.
Otherwise, we look at the CBAM and why it is upsetting so many countries, we look at the near-term shipping fuel options and talk more about RNG.
what we are covering
Sunday Thematic & weekly recap
Unevenness Of Basic Chemical “Costs”: Challenging Rationalization
Our pre-COVID study showing long-term chemical profitability headwinds was early, but now materializing – the market is in trouble, and a fix looks challenging.
A combination of overbuilding and a step down in demand growth poses a major threat to the industry, and we suspect that it will look structurally different in 2030.
Integration/job dependence may expose companies as marginal producers who otherwise look reasonably safe on the cost curve, leading to lower/painful prices.