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Our most recent publications are summarized in the blocks below and you can browse through all our reports to the right of the blocks. We encourage you to request a trial for full access to our research.

Are We Negative Enough on Ethylene?

Are We Negative Enough on Ethylene?

Very high shutdown costs are causing companies with more obvious shutdown candidates to pause, even taking losses for years, and to explore possible sales (even paying an acquirer) as alternatives – margins must go lower.

The oversupply in the global market is evident, and the steepness of the cost curve creates wildly different economics. Optimism for a better 2025 and 2026 is based on incremental operating rate improvements.

More closures will come, but they will likely timed to avoid a required round of maintenance spending where the capital cannot be justified. Eventually, the costs of decarbonization will drive closures – especially in Europe.

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Uptown Funk: European Ammonia Margin Improvement, Troubled Strategies, and EU Decarbonization Challenges  

Uptown Funk: European Ammonia Margin Improvement, Troubled Strategies, and EU Decarbonization Challenges  

General Thoughts: We highlight improving European ammonia producer fundamentals and Yara 2Q24 results as we take a cautious view of ammonia in 2H24 before our more constructive views start to materialize in 2025/26.

Supply Chain/Commodities: We discuss the transformation toward building products at Westlake that has paid off for shareholders, the weakness in lithium that has hurt Albemarle, and PPG vs. Sherwin-Williams equity trends.

Energy/Upstream: We provide a price table looking at the drop in US natural gas and USGC ethane during the past three months compared to Crude oil and ex-US naphtha prices – a positive trend for US chemical producers.

Sustainability/Energy Transition: Following Yara and H2Global conference calls, we provide our views and discuss whether the EC can maintain its positive momentum toward energy transition amid still-stiff challenges.

Downstream/Other Chemicals: We discuss US mortgage rate weakness spurring homeowner refinance activities, which could free up more funds for homeowners to spend on improvements and other notable global trends.

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Accounting Carbon: Maybe More Work for Banks and Lawyers than Developers

Accounting Carbon: Maybe More Work for Banks and Lawyers than Developers

1st Topic of the Week: A carbon capture conference in Houston next week appears to have more bankers and lawyers attending than developers. This is partly the conference focus, but it also shows the interest in carbon accounting and trading, with the value of tax credits and other credits critical to project success.

2nd Topic of the Week: We have to talk about US politics, as it is becoming central to almost all client discussions around business planning, not just for the next few months but also for the longer term.

Otherwise: We look at the lower cost of solar panels but the higher costs of power and question stock values.

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Global Shipping Issues Benefit Europe, Hurt Asia; Surging US Power Demand Will Not Be Met Without More Natural Gas Use

Global Shipping Issues Benefit Europe, Hurt Asia; Surging US Power Demand Will Not Be Met Without More Natural Gas Use

General Thoughts: Global container freight rates reached a fresh YTD high this week amid logistic issues and some inventory stocking amid production concerns. Western markets, on average, reflect tighter conditions than Asia.

Supply Chain/Commodities: We discuss European PE and PP spot price support, business updates from Asian Paints and Lanxess, and Hexcel’s 2024 profit outlook reduction due to a more cautious near-term aerospace view.

Energy/Upstream: We discuss Kinder Morgan and BP comments toward natural gas demand exceeding most forecasts amid surging power needs and highlight US natural gas price trends relative to Asia and Europe.

Sustainability/Energy Transition: Solar modules have fallen to a record low, though still at a notable premium to China, and we also provide a few additional thoughts on clean agriculture following our sector report yesterday.

Downstream/Other Chemicals: We highlight the significant drivers of improvement in US industrial production, with energy and utilities both seeing strength MoM, and we comment on North American rail traffic trends.

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Is This The Bottom? Crop Price Weakness Drives Sector Underperformance; Supportive Long-Term Factors Emerging

Is This The Bottom? Crop Price Weakness Drives Sector Underperformance; Supportive Long-Term Factors Emerging

General Thoughts: The S&P 500 Fertilizer & Agricultural Chemical equity index has underperformed in 2024, but several factors have partly offset crop market weakness to keep sentiment levels higher than many had feared.

Supply Chain/Inputs: We have held a bearish view of the agriculture economy in 2024. However, we maintain a more constructive view of 2025/26. Our optimism is selective in the near term and focuses mainly on cost position.

Biofuel: We highlight strategic moves from BP in SAF and ethanol, takeaways from the latest American Airlines sustainability report, and that weak crop prices benefit ethanol producers, though it could prove short-lived.

Sustainability/Energy Transition: We discuss the Fertiglobe winning H2Global bid to push low-carbon ammonia into Europe and the CF Industries collaboration with POET to spur farmer use of low-carbon fertilizer in the US.

Downstream/Other: We discuss the drivers of food prices, which has seen some relief with crop price weakness that we think will persist into year-end, and we flag cutbacks at Deere amid agriculture economy weakness in 2024.

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US Ethylene Producers Soak Up The Sun, US Propylene Also Sun Bathing But Faces A Cloudier Global Setting

US Ethylene Producers Soak Up The Sun, US Propylene Also Sun Bathing But Faces A Cloudier Global Setting

General Thoughts: US polymer prices have not reacted as aggressively to Hurricane Beryl and USGC production issues as its base chemical markets, and we discuss other factors driving polymer price support in the near term.

Supply Chain/Commodities: We highlight the recent strength in US spot ethylene and polymer-grade propylene prices, which could prove negative for non-integrated buyers and put downstream product margins at risk.

Energy/Upstream: We highlight developments in Asia natural gas and propane prices relative to US levels, which is a plus for US chemical feedstock exporters but much less so for global chemical markets amid Asia oversupplies.

Sustainability/Energy Transition: Global carbon capture capacity announcements and growth forecasts through 2035 call for the US to see the most growth; however, the number of new project announcements has slowed.

Downstream/Other Chemicals: We discuss recent interest rate developments and the negative impact of high interest rates on chemical sector M&A and related valuations amid a high level of uncertainty into late 2024/2025.

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