US commodity chemical spot prices are seeing downward pressure, putting domestic contract values at risk in many product chains in 4Q21. We discuss this development along with a few other relevant global industry trends. We flag pertinent chemical sector corporate updates (e.g., AkzoNobel, ExxonMobil, Chandra Asri, Johnson Matthey, LyondellBasell & others). We find relevant ESG items worth notice, ranging from EU carbon value weakness to the decarbonization initiatives noted in our ESG report in LINK. We note numerous other pertinent chemical sector items in this report.
US commodity chemical prices on average reflect downward momentum in 4Q21, and the recent drop in US natural gas values has lifted sector hopes for margin support. We frame our views of this development in this report. We flag pertinent Chemical sector corporate updates (e.g., Hexcel, BASF, Arkema, Bachem, Evonik, Repsol, Yansab, Kraton, OQ Chemicals & others). We find varied ESG items worth mentioning, ranging from recent updates on carbon capture products to the launch of a few global strategic initiatives. We note numerous other pertinent chemical sector items in this report.
Western premium chemical prices are beginning to move toward Asia levels, albeit at a mixed pace. We discuss market trends to consider in 4Q21. Avg. Western polymer and monomer values decline relative to Asia WoW. Crude/Naphtha values move higher relative to US Natural gas/NGLs WoW. Other global commodity trends flagged in this report comprise monomer, polymer, and feedstock indicators relevant to gauging sector profitability.
EIA estimates of energy needs and sources through 2050 poison net-zero targets – increased natural gas supply and rapid CCS growth are the antidote. The EIA projection of required fossil fuels volume suggests COP26 should focus on channeling fossil fuel along paths that broadly decarbonize fuel. Fossil fuel companies, like Chevron, talk about decarbonizing, but the industry will need broad support to pivot towards (clean) natural gas. Broad support for natural gas now may prevent further long-term harmful energy inflation. Investors and consumers want low carbon polymers AND less waste. We find corporates, such as Dow, working on both issues and the participant list growing. Canada – the county with the highest carbon tax has recently seen a significant number of new-facility investments – go figure!
We expect the US Chemical industry, on average, to post strong 3Q21 results. Market changes in October leave 4Q and 2022 unclear – we discuss global chemical profit trends and possible corporate benefits of “kitchen sinking” forward views. US ethylene margins are in freefall, in part because of higher feedstock costs, but also because of more supply. Costs are rising while many prices are falling. Higher energy costs globally and higher US NGL costs push producers in some segments to fight for price hikes. The risk for US producers is that weaker olefin prices and still lower, though rising export values, drive polyolefin prices down. Meanwhile, supply chains for durables remain tight, so demand remains strong, but inflation fears are escalating and this could end the party for all in 2022.