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what we are talking about today

Daily Chemical Reaction

Global Chemical Update – Candle In The Wind

Global Chemical Update – Candle In The Wind

Global polymer prices, on average, step lower WoW relative to feedstocks, pushing chemical sector profit lower WoW. We discuss why a near-term sector profitability rebound is unlikely.

Despite a weak near-term chemical sector profit setting, we add to views put forth in our Sunday research discussing the push among oil and midstream energy companies to expand in this area.

USGC ethane values held up WoW relative to Ex-US naphtha values WoW. However, US natural gas prices significantly rose compared to Brent Crude WoW, suggesting a flatter global chemical cost curve.

Macro indicators for farm-input sellers showed support WoW, as corn, soybean, and canola prices held up WoW. Ammonia values also showed support but lower margins due to higher natural gas costs.

Hungry Heart – Energy Sector Boosts Investments In Petrochemicals Amid ESG Pressure & Growth Concerns

Hungry Heart – Energy Sector Boosts Investments In Petrochemicals Amid ESG Pressure & Growth Concerns

Despite weak global commodity chemical fundamentals, capital investment in this area reflects support as energy sector participants push their portfolios downstream.

We discuss the drop in Brent Crude relative to US natural gas WoW and add to our general views on global petrochemical cost curve developments in 4Q22 and 1H23.

We highlight US propylene and ethylene spot market movements compared to their October contract settlement prices and price developments for both into the yearend.

We flag the importance of cutting emissions from the fertilizer sector to decarbonize food markets and discuss the rising low-carbon ammonia demand beyond fertilizer.

Our chemical sector supply concerns are much lower than demand concerns into 2023 – we flag freight rates, rail traffic statistics, and retailer reports supporting our view.

Homegrown – New Home Starts Decline As Higher Interest Rates More Than Offset Falling Material Prices

Homegrown – New Home Starts Decline As Higher Interest Rates More Than Offset Falling Material Prices

We discuss consumer spending within the housing products market, as the uptick in mortgage rates has cut new home affordability, and flag the polymer chains impacted.

We highlight the volume of LNG sitting on the water, waiting for a likely winter-led price hike, and a snapshot of German LNG import capacity growth by project status.

We discuss the CP Chemical/QatarEnergy announced USGC petrochemical project developments and LyondellBasell evaluating a metathesis-based propylene project.

We highlight China’s significant market share position in battery materials and opine on some estimates showing a chemical demand under many net zero assumptions.  

We illustrate the differences in the retailer updates from Target and Kohls relative to Home Depot and Lowe’s, and we discuss US industrial production developments.

what we are saying about tomorrow

ESG, Recycling & climate 

Comfortably Numb: The COP27 Discussion Is Easier Than The Need

Comfortably Numb: The COP27 Discussion Is Easier Than The Need

While COP27 has been characterized by platitudes and agreements in principle, there is a lot more focus on how much money needs to be spent than on who pays.

Estimates of spending needs are varied, and poorly defined by “where needed”, but the numbers are very large and relentless – year after year – through 2050.

Well-defined incentives are likely the only way to get things done, but getting global agreement on incentives will be hard, as will compensating poorer nations.

Meanwhile, water is pushing its way into the front row – more concerns over supply and more need for action – we still like the investment space very much.

Otherwise, we take on a couple of recycling issues, oxy-combustion, other overly stretched power options, coal, and biofuels.

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what we are covering

Sunday Thematic & weekly recap