Higher feedstock costs support chemical prices as producer profitability diverges
🏭 During October 19–23, chemical markets remained influenced by elevated energy costs and Middle Eastern supply disruptions. Upward pressure on PE and PP prices emerged in some regions, although producers’ ability to pass costs through depended on demand and alternative supplies.
🛢️ For naphtha-based plants in Asia and Europe, higher feedstock costs squeeze margins when product prices fail to keep pace. US ethane-based producers retain a relative cost advantage, creating differences in profitability across feedstocks and levels of production integration.
📊 Dow’s third-quarter results highlighted the role of pricing. Revenue rose 13% year over year, with selling prices increasing 14% while sales volumes declined 1%. Its Packaging & Specialty Plastics business improved integrated margins through higher PE prices and internal efficiency measures.
⚖️ These results suggest some producers can benefit from stronger pricing and favorable cost structures, but do not establish a broad recovery in industry demand. Weak purchasing activity in some markets continues to limit price increases, particularly where customers can postpone orders.
🔎 Near-term attention centers on oil prices, Middle Eastern feedstock availability and actual PE/PP price increases. Longer term, excess capacity continues to intensify competition, limiting the extent to which supply-driven price gains can sustain a lasting recovery in profitability.
#Chemicals $ETC
🏭 During October 19–23, chemical markets remained influenced by elevated energy costs and Middle Eastern supply disruptions. Upward pressure on PE and PP prices emerged in some regions, although producers’ ability to pass costs through depended on demand and alternative supplies.
🛢️ For naphtha-based plants in Asia and Europe, higher feedstock costs squeeze margins when product prices fail to keep pace. US ethane-based producers retain a relative cost advantage, creating differences in profitability across feedstocks and levels of production integration.
📊 Dow’s third-quarter results highlighted the role of pricing. Revenue rose 13% year over year, with selling prices increasing 14% while sales volumes declined 1%. Its Packaging & Specialty Plastics business improved integrated margins through higher PE prices and internal efficiency measures.
⚖️ These results suggest some producers can benefit from stronger pricing and favorable cost structures, but do not establish a broad recovery in industry demand. Weak purchasing activity in some markets continues to limit price increases, particularly where customers can postpone orders.
🔎 Near-term attention centers on oil prices, Middle Eastern feedstock availability and actual PE/PP price increases. Longer term, excess capacity continues to intensify competition, limiting the extent to which supply-driven price gains can sustain a lasting recovery in profitability.
#Chemicals $ETC