2022 C-MACC Coverage of Companies and Commodities
what we are talking about today
Daily Chemical Reaction
Global Chemical Update – Margins Fall, Demand Lukewarm
Global polymer prices declined further WoW, pushing integrated margins lower, and we expect the potential for further declines in late 2Q23 and into 2H23 as production improves more than demand.
We add two new sheets to our weekly product: a global polypropylene analysis and a global chlor-vinyl analysis. We favor Chlor-vinyls relative to most other polymer chains, though all face headwinds.
Global monomer prices also fell WoW, which could be a margin benefit for some non-integrated buyers with spot exposure. However, our demand indicators from most chains are lukewarm at best.
Mineral Index Drops, Dow Revenue Cut: Demand Headwinds & Manufacturer Challenges Persist
The C-MACC Clean Energy Minerals Monthly Price Index fell ~6% MoM in May to reflect a 28% lower YTD level, with components beyond lithium leading the index lower amid loosening supply.
Dow cuts its 2Q23 revenue view below Street expectations, and we discuss other market news supporting our view that global demand headwinds are much stiffer than those facing supply.
We discuss ExxonMobil’s view of increasing shale output through technological advances and flag shifts in global petrochemical feedstock costs WoW supporting our chemical supply views.
Expensive polyester recycling faces challenges, paper packaging with plastic barriers poses a recycling challenge, and electric furnaces for ethylene production face power and cost challenges.
US job growth is strong in services but weak in manufacturing, hampered in some areas by permitting and infrastructure challenges. US reliance on imports may increase as a result.
Wake Me Up Before You Slow-Go: Investor/Litigator Pressure, Market Disruptions, and Economic Woes
Signs of a more aggressive global slowdown are everywhere – from weak crude oil demand to a drop in global confidence/output, despite lower natural gas prices. Is Germany contagious?
We note the lifeline thrown to the LyondellBasell refinery and look at this in the context of the “anti-woke” movement, note Chevron and ExxonMobil annual meetings – enter the litigators?
The restart of the new Shell polyethylene complex in the US could not come at a worse time, given depressed domestic and export demand – we still believe Shell will sell this business.
Renewable power ambitions for 2023/2024 are likely unachievable given supply constraints and higher costs, except in China, which could surprise to the upside – likely not a good thing.
what we are saying about tomorrow
ESG, Recycling & climate
Chocolatewashing – What benefit does new Mars wrapper bring?
A story picked up by the BBC discusses Mars trialing paper wrappers for the Mars Bar in the UK; the claims of carbon neutrality concern more than the waste claims.
This is likely a public pressure move, with the path of least resistance being to use an inferior and more costly (life cycle) option versus better public education.
So many proposed solutions to climate change and circularity will make things worse but there is no focused bipartisan effort to educate – so dumb stuff happens.
Another potential to waste a lot of money because of the wrong focus is Hydrogen, which needs both costs and demand to work, and is not a magic bullet.
Otherwise, we look at misleading carbon capture messaging, the cost of doing solar in the US, more ESG fighting with the oil companies, and the weather.
what we are covering
Sunday Thematic & weekly recap
Saving Our Way To Industrial Doom – Europe and Natural Gas
Some of Europe’s natural gas demand cutbacks come at the expense of industrial output – is this something to be proud of? Jobs will likely be lost.
But European cutbacks could see a surplus of LNG later this year if the weather is kind – lower prices – attractive for European industry – more LNG volatility.
But Europe, especially Germany, remains uncompetitive, and it is hard to see how the decline in European industry does not accelerate; not what is needed.