2022 C-MACC Coverage of Companies and Commodities
what we are talking about today
Daily Chemical Reaction
Winners & Losers Will Emerge – Clean Tech & Strategies Will Win On Merit, Not Participation & Intentions
Global petrochemical producers outline their market and growth ambitions at WPC. Though all have views, strategies vary, and some bold, risk-adjusted moves lack appreciation in our view.
Russian energy flows to China have risen since the Russia/Ukraine conflict. Prices are hard to pinpoint, but this trend favors China’s global petrochemical feedstock production cost position.
We highlight NW Europe spot polyethylene and polypropylene prices relative to the US, flag Olin restructures and cuts epoxy production due to weak demand, and some India market news.
We highlight waste-to-energy market developments, a biomass-to-fuel project development under review in Louisiana, and multiple global clean energy news items worth considering.
We discuss US chemical manufacturer shipment trends and inventory-to-sales ratios suggesting limited supply issues. On the other hand, our demand concerns remain elevated.
Changes – Chemical Companies Respond To Investor & Climate Activist Pressure, Return Profiles In Flux
Global chemical feedstock price shifts and a push toward net zero have shifted many business plans drastically during the past 24 months, with some carrying more return risk than others.
The global chemical feedstock market significantly favors North American producers relative to those in Europe and Asia, given its cheaper natural gas/NGLs and wide oil-to-gas ratio.
LyondellBasell provided polyolefin growth assumptions through 2030 and gave O&P business guidance for 2027 at its recent investor day – we comment on global supply and demand trends.
We flag LyondellBasell, Dow, and BASF efforts to cut carbon emissions and boost product circularity while being focused on growing returns – we compare and contrast these initiatives.
Global container freight rates on average have returned to 2017-2020 average levels, with the major outlier being elevated Europe to US rates. Dow reiterates its 1Q23 macro outlook.
Global Chemical Update – Atmosphere Shift
C-MACC co-founder, Cooley May, will attend the World Petrochemical Conference this week, where global production shifts, circularity, & GHG emissions will be more in focus than gross capacity growth.
The recent CERA conference focused more on clean energy and energy producers extending product chains into chemicals as fossil fuel demand declines – a growth development that WPC will also target.
US ethylene producers are profitable across all primary feedstocks, with propane cost advantaged to ethane WoW. Asia and European ethylene production margins have improved but remain negative.
what we are saying about tomorrow
ESG, Recycling & climate
Carbon Capture – Increasingly the Key To Energy Transition
Decarbonizing hydrocarbon use is in the spotlight as countries reel from a year when energy security has been higher on the agenda than energy transition.
Our expectation that more oil and gas, especially gas, will be needed, than in original plans is turning out to be correct but large-scale CCS was part of our view.
The need to align safe sequestration locations with economics and permitting is the challenge from here – Malaysia for example has ample space but no price.
The UK has unveiled a bold but expensive plan to support CCS and coastal European countries will likely need to do the same or lose investment to the UK.
Otherwise, the questions of the critical material get louder, although prices move lower, recycling targets look challenged and renewable inflation continues.
what we are covering
Sunday Thematic & weekly recap
Another spike in commodity prices in 2023/2024? CERA Recap
Our meetings at-and-around CERAWeek covered many energy and associated industries and reflected one clear theme: all agree change is coming in energy.
While ambitions are high, roadblocks and bottlenecks are significant and range from permitting to finance in addition to necessary new technology evolution.
Oil and gas are here to stay for a while, and the focus should be on making their use cleaner while we still need them – again, there was broad consensus.