US commodity chemical equities have underperformed peer subsectors and the broader market since the start of 2019. This report discusses the relative negative investor sentiment targeting the commodity sector. US spot butadiene values sit above the mid-point of the five-year range, and we flag several global market indicators worthy of notice in late 2Q21. We flag pertinent chemical sector corporate items (e.g., Total, PPG, Saudi Aramco, & Kemira news; Several Capex & price nomination updates) Carbon market discussions advance and we flag more ESG sector items. We flag multiple macro-economic factors worthy of note, ranging from the continued strength in the US used car values to global shipping challenges.
This research report discusses the risk of an overreaction among chemical producers to tight supply chains and mixed global availability by region that could result in a profit hangover ahead for some major product chains. We highlight pertinent chemical sector corporate updates (e.g., Ashland, Dow, Sekisui Chemical, Sinopec, Wacker, & other price & business news). Broadly demand indicators remain robust. US refinery operating rates and North American chemical rail traffic increase WoW. We find numerous ESG announcements worth note, particularly noting updates in green methanol, bio-plastics, & an e-cracker development. We note numerous other pertinent chemical sector items in this report.
Building & Construction raw material prices rose notably in 2H21. This report discusses the recent decline in price from historic highs for few key products amid improved supply, signaling 2Q21 will likely mark the peak. This report flags the recent development in Crude prices relative to Natural gas and displays an estimated US Chlor-vinyl profit trend. We highlight pertinent chemical sector corporate items (e.g., Huntsman, BASF, WR Grace, Pembina, Indorama, SABIC & other producer updates). Carbon prices in Europe bounce higher WoW but remain below the mid-May peak – we highlight a few fundamental drivers of this market. We note numerous other pertinent chemical sector items in this report.
Climate abatement is the key to net-zero goals – it is not the same thing as eliminating fossil fuels. This report discusses this common misconception. Carbon use initiatives are emerging – all are worth exploring, but combined, they will likely only be a tiny part of the overall needed abatement. We discuss more repercussions in the oil sector and potential price inflation. Recycling growth rates may not impact overall plastic demand, but the volume of recycled polymer available to the end-use market may affect demand. LNG continues to sit on the leading edge of carbon capture, even if plans are not yet fully formed.
The multiple supply sources of propylene and the co-product nature of much of its production make it one of the most difficult basic chemicals to forecast. The recent price volatility in propylene may encourage consumers of propylene derivatives to look for alternatives, either less volatile or easier to hedge. We see the volatility as hard to predict and likely to continue, but we also see a higher floor price for propylene relative to ethylene as likely for the longer term. Our research also discusses some industry and climate-related news, and we comment on unintended consequences of some initiatives and misleading analysis.