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.
We are surprised by the strength of ethylene in Asia, as well as some other Chemical prices, and question whether China is building inventory, or more likely simply has too much ethylene capacity off-line for maintenance. If it was an inventory build, polyethylene prices would likely be strong also but they are not.
While naphtha values have risen relative to crude from the extreme lows of April, the discount remains significant versus history and we still hold the view that as long as jet fuel demand remains depressed and gasoline does not bounce fully back to 2019 levels – naphtha will remain cheap.
The rise is US ethane prices is consistent with more ethylene capacity and declining Permian output, but we would expect ethylene cutbacks to offset this in the near-term – the step change in ethane prices required to attract more volume from the Marcellus would make the US very uncompetitive.
Asia ethylene and propylene continue to find support and reflect strength on a relative basis to USGC markets – a near-term plus for US exporters but something to approach with caution ahead of a likely 2H20 supply response.
We highlight takeaways from the latest Daicel financial results posting for acetate tow and from the latest Toray report for base chemicals & composites.
Other items of note today range from oil-and-gas commentary, the support in US polyethylene order books, and highlight US chemical rail car loadings.
We discuss automotive market headwinds (Hertz bankruptcy, falling used car values & rising US consumer negative vehicle equity scores) that we view as negative for chemical demand in a few key areas – we frame the issues.
North America methanol contract nominations for June reflect significant premiums to US and Asia spot methanol values – we remain unconvinced.
Other items of note today range from oil-and-gas commentary, to strength in some chemical chains that are being helped by recent supply curtailments, to lithium producers waiting out pandemic for the EV revolution to resume.
We discuss recent US polyvinyl chloride (PVC) market price support that we view as a plus for USGC producer integrated profit into late 2Q20. An outsized positive for Westlake.
We note Celanese acetyl-chain price hike announcements – the upward trend in China spot values since early-to-mid April offers support in our view, but the macro backdrop does not.
Other items of note today range from oil-and-gas commentary, to global butadiene price moves, to increasing hopes on an automotive recovery.
Butadiene reflects multi-year lows relative to ethylene in most markets. This illustrates the disconnect between the consumable and durable markets.
Asia chemical values on avg. rise WoW relative to the US and Europe. This could encourage positive commentary in conferences this week – we do not believe the strength is sustainable.
Odd price moves continue – both within chemicals and in the stock market, with incremental availability (or lack thereof) and incremental news driving wild swings in pricing of products and stocks. The battle between hope and despair
We have been surprised by some of the reactions (and over-reactions) and how much what are clearly anomalies are driving behavior.
The macro numbers tell the real story – unemployment is at unprecedented levels (and getting worse) and consumer sentiment has taken a massive beating. Demand for non-essentials is going to be lower in 2020 than in 2019 – we do not yet know by how much, but the optimists are likely to be disappointed.