• Spot earnings remains flat this week at around R53.7/share for FY22.  There is an additional R4.50/share of upside to spot earnings if US chemical prices maintain the current premium to Asian prices. 
  • Chemical prices continue to trend lower in Asia with ethylene prices falling almost 10%. LDPE prices were also lower.  US prices for ethylene increased by 7% but polyethylene prices remained steady.  We also highlight the decline in ammonia prices this week (-12%).

Global chemical news

  • Chinese polyethylene imports decreased by 31.6% (YoY) in May.  The May import data reflect deals concluded in March-April, the period following the winter storms in the US.  New capacity in China have also reduced import dependence and an additional 5.5mn tons of new capacity is set to start in 2021 (link).
  • S&P Global published an outlook for chemical prices for 2H2021 (link).  The report highlights increasing Asian ethylene supply but expects healthy margins through the period.  US polyethylene export prices are expected to soften as trade increases.  Prices are expected to remain higher than ‘normal’, however.