Last updateFri, 11 Oct 2019 2pm

Chemical Activity Barometer Fell in July

The Chemical Activity Barometer (CAB) eased 0.2% in July on a three-month moving average (3MMA) basis following three months of gains in March-May and weak months in the winter. On a year-over-year basis, the barometer fell 0.2% (3MMA).

The unadjusted measure of the CAB rose 0.2% in July and fell 0.4% in June. The diffusion index rose to 65% in July. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for June was revised downward by 0.39 points and that for May by 0.09 points.

$5.6 Billion Petrochemical Facility Planned in Canada

West Coast Olefins of Calgary has secured a 300 acre site in the BCR Industrial Area within the city of Prince George, British Columbia in preparation for the construction of a $5.6 billion petrochemical project at the site. The project would include a world-scale ethylene plant and polyethylene facility and the majority of the polyethylene product would be shipped to growing Asian markets.

The overall project will include an NGL recovery plant to recover ethane, propane, butane and natural gas condensate from Enbridge’s west coast pipeline; an ethylene plant to produce one million tons per year of polymer-grade ethylene; and a polyethylene plant to consume most of the ethylene produced.

U.S. Crude Oil Exports Reach New Highs

U.S. crude oil exports reached a new all-time high of 3.3 million barrels per day (b/d) in June 2019, a 1.1 million b/d year-over-year increase, according to the latest Monthly Statistical Report released by the American Petroleum Institute (API). This latest milestone came as the U.S. continued to sustain world-leading crude oil production of 12.2 million b/d, including 5.0 million b/d in West Texas’ Permian Basin. Increasing U.S. crude oil exports are a net positive for American consumers who have benefited from significant declines in energy expenditures since the rise of the shale revolution. U.S. petroleum demand reached its highest level for June since 2005.

Oil Market Re-Balancing Slows Down

The outlook for oil demand growth in 2019 is little changed from the last Oil Market Report at 1.2 million b/d. On the basis that the economic outlook in 2020 is better, there will be a rebound to 1.4 million b/d. This is despite the fact that the International Energy Agency has downgraded its estimate for global oil demand growth in 2Q19 by 0.45 million b/d. There are many reasons for this: European demand is sluggish; growth in India vanished in April and May due to a slowdown in LPG deliveries and weakness in the aviation sector; and in the U.S. demand for both gasoline and diesel in the first half of 2019 is lower year-on-year. Unless the economic backdrop and the trade disputes worsen, global growth is nevertheless expected to be higher in 2H19. There will be support from oil prices, which, if they stay roughly where they are today, will be about 8% below the levels seen last year.

Global Chemicals Output Continues on a Solid Note

Data collected and tabulated by the American Chemistry Council show that global chemicals production in the second quarter 2019 is improving, increasing by 0.4% in May and following a 0.3% gain in April. During May, chemical production increased everywhere but Europe. Headline global production was up 1.6% year-over-year on a 3MMA basis and stood at 117.6% of its average 2012 levels.

Among chemical industry segments, May results were mixed on a product basis, with gains in bulk petrochemicals and organics, synthetic rubber, manufactured fibers, coatings and other specialties offset by weakness in agricultural chemicals consumer products, inorganic chemicals, and plastic resins. Considering year-earlier comparisons, growth was strongest in manufactured fibers followed by synthetic rubber, bulk petrochemicals and organics, coatings, and plastic resins.

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