This report discusses abnormally high US (& global) auto demand, elevating used car values to record highs, and the production constraints working to keep new car markets imbalanced. A net negative for chemicals, more levered to production. The dramatic volatility in US propylene prices recently shows the difficulties with balancing the supply and demand of a chemical mainly produced as a by-product. Current parity with ethylene will unlikely persist, with ethylene most likely to fall. We also propose that a better model for plastics recycling is needed that considers technology and behavioral changes to increase the volume of reusable plastics – pyrolysis remains necessary but appears likely to shrink in importance.
Global supply chains remain out-of-balance, as production continues to limp higher at a slower pace than market expectations set a few weeks ago. This report flags lingering issues that suggest mixed benefits in 2Q and 2H21. We highlight pertinent chemical sector corporate items (e.g., EMS Group update; multiple examples of product news and Capex items worth note). This report’s other relevant items include a view of the carbon footprint of different modes of transportation, the auto production cuts stemming from the chip shortage, and a general chemical cost curve view to close the week.
This report highlights multiple indicators of end-market demand strength, ranging from autos to building materials & coatings. Expectations are high, and we flag a few demand and supply chain items worth consideration in 2Q. We highlight pertinent chemical sector corporate items (e.g. Johnson Matthey & RPM International business updates; multiple commodity chemical production notices, M&A activity notices, & Capex initiatives) This report’s other relevant items include broad strength in new & used auto sales in 1Q21, further evidence of tight global polymer markets, and a general view of the typical path being taken by most to curb CO2 emissions.
While advanced recycling is not advanced, it might look so versus landfills. We do not believe it is the long-term solution, but it is likely integral in any sophisticated recycling operation as there will always be some materials that need it Methanol is making its claim on the green future and seeking a fuel role based on capturing carbon in the manufacturing process, so “CO2 neutral” when it is used. We see much more value in chemicals, where blue methanol would be much cheaper We highlight the relentless flows of money into ESG and sustainability funds, which need disclosure oversight and if unchecked could encourage greenwashing