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A widespread increase in demand drove chemicals production up in the second quarter, with the global chemical operating rate climbing higher in June.
The latest global data from the American Chemistry Council shows increased momentum in June, albeit with clear regional differences, adding weight to widespread management expectations of continued growth in the second half of the year, or in the third quarter, at least.
The supply shortage in the European acrylonitrile-butadiene-styrene (ABS) market is expected to continue across H2 2021, as ongoing pressures are likely to prevent any relief to the difficult market situation, including production issues in the supply chain, low imports, and strong demand.
Bullish US glycol ether spot prices have opened an arbitrage for European propylene glycol methyl ether (PM) exports in Q3.
Petrochemical demand in the Middle East is on an uptrend during summer while market players continue to tackle high freight costs and severe container shortages.
However, with the Delta strain in every nook and cranny of Asia, economies could be brought to their knees amid fast-rising cases. To some degree, the highly transmissible Delta variant could even upend demand in petrochemical and oleochemical markets.
Port congestion is likely to continue to affect Asian demand for ABS as buyers across the supply chain opt to postpone purchases amid delayed cargo arrivals.
Chemical markets may be artificially buoyed by inventory building along stretched supply chains, but poor downstream demand could lead to rapid destocking in the second half of 2021.
Meanwhile, refrigerant regulations that should soon go into effect in the US should encourage buildings to switch over to hydrofluoroolefins (HFOs) and other less powerful greenhouse gases, as automobile producers have mostly changed over.