In a recent report, we discussed the relative demand strength in the US, as well as the high costs of importing chemicals and polymers into the US and suggested that higher energy and feedstock costs could arrest price declines in the US at levels that still drive significant profitability for US producers. With that in mind, it is interesting to note the upward move in propylene spot prices in reaction to higher propane prices and the resulting flat settlement in propylene contract prices.
Source: Bloomberg, C-MACC Analysis, February 2022
As the spread in the Exhibit below shows, propylene has bounced at a higher spread to propane than prior lows and the spread remains well above 2019 and 2021 levels. Our view on the US landscape is that demand strength and logistic issues should allow US chemical and polymers sellers to make more money than most are expecting in 2022, albeit well below 2022 levels. See more in today's daily report.
Source: Bloomberg, C-MACC Analysis, February 2022
