Open ResearchFree Access Reports
Below we share publications that are open to download and read, free of charge.
Slow Burn – Global Indicators Suggest Supply Issues Unlikely To Abruptly Reverse, Demand Strong
US commodity chemical markets still reflect broadly tight conditions. We revisit polymer-grade propylene (PGP) as an example monomer facing price degradation amid increased but questionably timed supply availability.
We highlight pertinent chemical sector corporate items (e.g., Sherwin-Williams, Eastman, Indian Oil, Air Products, & other producer updates).
Carbon prices in Europe move higher WoW toward recent record-highs – we highlight a few drivers of this market and other ESG sector trends.
We highlight recent Visa data providing further evidence of US consumer spending strength alongside several other positive downstream reports.
Taking Stock: Rethinking “Just in Time” is Adding to Demand
A coordinated global manufacturing shift of sentiment towards supply chain security is working in favor of a stronger-for-longer demand uplift in 2021.
The product tightness and price inflation to date could last and, in some cases, accelerate in pockets of chemical supply chains before a “new” normal is reached.
Shipping companies are stoking the fire, suggesting constraints for the year, and spurring freight rate inflation – container and rail car shortages could persist.
Higher carbon prices in Europe are driving investment decisions – no carbon pricing in the US is driving lots of talk but limited action.
Trading Places: Momentum Leaving Commodity Chemicals
US commodity prices will likely peak in 2Q21, weather permitting.
Commodity length likely to hurt producer profits less than their equities in 2H21.
Investor shifts from commodities to specialties and selective positions likely.
Our preferred commodity chains remain Vinyls, Acetyls, & Urethanes.
Commodity company capital deployments will face increased levels of scrutiny.
Global sector environmental efforts gain positive momentum, less so in the US.
Simply Irresistible: Controlling The Urge To Spend Will Be Agonizing for The Chemical Industry In 2021
This report discusses relevant sector trends from the 1Q reporting season. So far, most have reported notably high profits and FCF, and issued expectations that the gravy train has built momentum – sequential improvements from 1Q are likely.
There are very few companies with balance sheet issues, as cash flows had been robust pre-covid, but not as high as the first part of the last decade, which drove significant capital spending – now they are again – so what happens next?
We predict that the relative winners 5 years from now will be those companies that show the best capital discipline now and through the balance of 2021 and instead of spending to get bigger, spend selectively to look better.
Ziggy Stardust – US Spot Ethylene Values Leap Above Asia, Global Derivative Indicators Mixed
US spot ethylene trended up sharply this week and now reflects a premium to Asia spot levels. This report comments on the derivative demand-pull and supply setting that suggests lower integrated derivative margins in 2H21.
We highlight multiple corporate items (e.g., Orion Engineered Carbons 4Q update; Clariter, DSM, Henkel, LBB Specialties, TechnipFMC, Shell & PTA Plastics strategic updates; Braskem Idesa partial restart; Polynt price hikes)
Other relevant items include comments on China polymer prices reflecting downward pressure WoW, Phillips 66 establishing a low carbon unit to focus on cutting GHG emissions, and recent improvement in the Baltic index.
COVID Fix Likely Closer, But How Broken Will We Be Before It Arrives? Can Industry Shrug Off A Terrible Few Months?
Unlike Europe, which is beginning to see signs that increased restrictions are slowing the rate of COVID19 growth, the US is an uncoordinated mess, and the exponential virus growth that we are seeing today could worsen into the holidays.
During the past week, we find global chemical production on the rise, returning quickly toward normal (and to higher levels in 1H21) as elevated per-unit margins post 2Q/3Q production outages and supply-chain dislocations incentivize activity.
While we expect a strong holiday season from a consumer spending perspective, as households try to compensate for a lack of the usual large family gatherings and short vacations, our concern is that supply could far overshoot demand in 1H21.