Latest Reports


Our most recent publications are summarized in the blocks below and a more complete list can be found to the right of the blocks. Please call us with any questions.

With A Little Help From My Friends – A Case For US Propylene Support Near-Term

Several factors are emerging in favor of USGC propylene price support near-term and suggest margin pressure for non-integrated derivative producers, many of whom are seeing depressed demand.
We add to our recent discussions of methanol and polyurethanes markets, and we highlight corporate updates from AkzoNobel and Johnson Matthey.
Other items of note range from energy commentary, to packaging demand in Europe, to US chemical rail traffic reflecting an uptick in volume WoW.

Higher Crude, Asia Outages & Rubber Limits – The Three Amigos Taunting US Production

Asia Butadiene (BD) values reflect a five-year low relative to naphtha and BD derivative values reflect little sign of improvement – Asia ethylene is surging higher and this suggests to us that naphtha cracker operating rate issues beyond planned outages in Asia and Europe have not been resolved.
We add to our commentary on the US polyethylene (PE) market yesterday and discuss the spike higher in China acetone prices.
Other items of note today range from oil-and-gas commentary, to rising PET prices in China, to a 2020-22 period targeting self-sufficiency (vs. trade).

US Polyethylene (PE) Gets Some Help; Methanol Finds A Friend (MTO)

US polyethylene (PE) producer nominated contract price uptick for June gains support based on spot and export price trends and higher net costs. We still see margin risk in 2H20 as producers react to positive margins.
We revisit global methanol following an ~18% drop in US methanol values WoW, a notable rise in implied MTO profit and US export market support.
Other items of note today range from oil-and-gas commentary, to USGC ethylene exports to Asia, to multiple downstream restructuring reports.

Is There A Disconnect? We Don’t Think So

The medium-term caution on margins that we continue to discuss in our daily and thematic work is currently at odds with what is happening in the stock market (relatively easy to explain) and at odds with recent price moves for oil and for some chemicals. We expected significant volatility in 2Q20 and into 2H20, and it is happening – in some cases more than anticipated.  
The stock market is forward looking and is pricing in a strong economic bounce back from the 2Q lows – Materials sectors like Chemicals tend to be early movers, down and up, because of the anticipated leverage in commodity pricing. Macro data is mixed, but as we have said in prior work, the good news is getting more coverage than the less good news and the jobs number is clearly a positive surprise.  
Chemical margins should be weaker everywhere – reflecting the lower demand – and spot prices should reflect how hard it should be to find an incremental buyer. This is true in some cases (butadiene), but it is certainly not broad – yet.    

Firing the Jets – USGC Production Should Surge as Skies Improve in Asia; Lifts Odds of 2H Turbulence 

Multiple factors (expanding oil-to-gas ratio, surging Asia ethylene spot markets, etc.) move in favor of USGC petrochemical production and export hikes – the current landscape as notably favorable for US vinyl producers.
We discuss supply/demand mismatches leading to commodity price/margin volatility and our view that 2H20 per-unit profit headwinds will remain stiff.
Other items of note today range from oil-and-gas commentary, to concerns with Asia butadiene oversupply, to a possible Westlake vote of confidence.