Chemicals Sep 21–25: feedstock costs rise faster than finished-product prices
🛢 Oil holding above USD 100/bbl and elevated Hormuz freight costs continued to lift naphtha, methanol, benzene and ethylene costs. In China, mid-month methanol rose 9.4%, benzene 6.5% and acetic acid 17.4%, clearly outpacing many polymer products.
📉 In contrast, PP and LLDPE futures on Dalian fell on Sep 21 as downstream demand remained too weak to absorb higher input costs. Oil-based PE margins were estimated near −335 yuan/t, while coal-based PE still generated around +1,501 yuan/t, highlighting the widening gap between feedstock routes.
🏭 Asian ethylene supply remained relatively tight due to maintenance and reduced Middle Eastern cargoes, but propylene and PP weakened as demand lagged. MTO/MTP economics also deteriorated as methanol rose faster than olefin output prices, prompting some producers to cut operating rates or shut units.
🌾 Chinese urea showed a similar pattern. Coal-based production costs rose about 10% while urea prices increased only around 1%, pushing theoretical margins down to roughly 24 yuan/t. This indicates that higher input costs are still not being fully passed through.
🇪🇺 In Europe, Ineos’ temporary shutdown of three Hull plants, alongside EU chemical operating rates near 75%, continues to reflect structural pressure from expensive gas, electricity and feedstocks. Low Rhine water levels and the EU’s anti-dumping investigation into PVC add further logistics and trade risks.
🔎 Looking ahead, China’s Golden Week, oil prices and Hormuz freight will be key variables. If energy costs remain elevated, PP/PE and urea margins may stay compressed even as basic chemical feedstocks remain firm.
#Chemicals $CL
🛢 Oil holding above USD 100/bbl and elevated Hormuz freight costs continued to lift naphtha, methanol, benzene and ethylene costs. In China, mid-month methanol rose 9.4%, benzene 6.5% and acetic acid 17.4%, clearly outpacing many polymer products.
📉 In contrast, PP and LLDPE futures on Dalian fell on Sep 21 as downstream demand remained too weak to absorb higher input costs. Oil-based PE margins were estimated near −335 yuan/t, while coal-based PE still generated around +1,501 yuan/t, highlighting the widening gap between feedstock routes.
🏭 Asian ethylene supply remained relatively tight due to maintenance and reduced Middle Eastern cargoes, but propylene and PP weakened as demand lagged. MTO/MTP economics also deteriorated as methanol rose faster than olefin output prices, prompting some producers to cut operating rates or shut units.
🌾 Chinese urea showed a similar pattern. Coal-based production costs rose about 10% while urea prices increased only around 1%, pushing theoretical margins down to roughly 24 yuan/t. This indicates that higher input costs are still not being fully passed through.
🇪🇺 In Europe, Ineos’ temporary shutdown of three Hull plants, alongside EU chemical operating rates near 75%, continues to reflect structural pressure from expensive gas, electricity and feedstocks. Low Rhine water levels and the EU’s anti-dumping investigation into PVC add further logistics and trade risks.
🔎 Looking ahead, China’s Golden Week, oil prices and Hormuz freight will be key variables. If energy costs remain elevated, PP/PE and urea margins may stay compressed even as basic chemical feedstocks remain firm.
#Chemicals $CL
