Global Chemicals – Not expecting much of an Iran impact
· Do not expect meaningful crude oil or chemical price declines from sanction easing
· Supply/demand unchanged; expect little change to chemical exports out of Iran
· Reiterate Overweight ratings on US commodity names – DOW, LYB, MEOH and WLK
Our analysis studying macro and micro factors as they pertain to Iran and its chemical industry in-light of recently announced sanction easing point to minimal downside chemical pricing risk.
The main macro risk stems from higher Iranian oil output and exports leading to lower naphtha based marginal ethylene production costs and pricing. Near-term sanction easing only allows a 0.3m bbl/day increment in Iranian oil output – a meager amount. Beyond the near-term even though Iranian oil output could rise by as much as 3.0m bbl/day we would remind investors that Saudi Arabia has swung its oil output between 8.5-11.5 bbl/day over the last decade in an attempt to maintain prices – any upswing in Iranian output could be offset by reduced Saudi production.
On a micro level the terms of the sanction, based on our estimates, would allow at most 1.0m tons of incremental petrochemical exports coming out of Iran – not a needle mover. Additionally we believe there is no quick fix to issues resulting in reduced utilization rates at Iranian facilities and capacity addition delays. Sanction easing, in our view, will not change our base case ethylene supply/demand model. We further contend Iranian product had already been making its way into the export markets during the sanction period as evinced by a meaningful rise in Iranian petrochemical export value and volume over the last three years as well as increased Iranian natural gas production during this period. We do not expect to see a major jump in exports. We would be buyers of US commodity chemical shares – DOW, LYB, MEOH and WLK – on weakness.read more...
11/04/13 Industry Note
Global Chemicals: Ethylene co-product tightening overstated
10/14/13 Industry Note
US Chemicals: Justifiable outperformance in Q3'13
10/08/13 Industry Note
MENA Chemicals: Consensus beats but q-o-q declines in Q3'13
09/23/13 Industry Note
Global Chemicals – Supply/demand update affirms tightness
09/06/13 Industry Note
Higher C3 pricing here to stay
07/22/13 Industry Note
US Chemicals: Assessing the China impact
07/15/13 Industry Note
US Chemicals: Strong commodities mixed specialties in Q2'13
05/13/13 Industry Note
US Chemicals: Ethane oversupply despite including exports
05/06/13 Industry Note
US Chemicals: Naphtha not a US ethylene party spoiler
04/22/13 Industry Note
US Chemicals: Some valuation perspective
04/15/13 Industry Note
Global Chemicals: Gas monetization - Ethylene, GTL or LNG?
03/11/13 Industry Note
Global Chemicals – Further consolidation in TiO2 land?
02/25/13 Industry Note
Alembic Global Advisors - TiO2 may be troughing out; recovery ahead?
02/19/13 Industry Note
Global Chemicals – Cost curves still misunderstood
01/14/13 Industry Initiation
US Chemicals: NGL depression could linger
12/31/12 Industry Note
US Chemicals: Identifying the winners for 2013
10/15/12 Industry Note
US Chemicals – Not all doom and gloom in Q3’12
10/08/12 Industry Note
MENA Chemicals: Expecting q-o-q earnings growth in Q3'12
09/10/12 Industry Note
Global Chemicals – The capital cost conundrum
07/16/12 Industry Note
US Chemicals – Not all doom and gloom in Q2’12
06/18/12 Industry Note
US Chemicals – What would make us change our cycle view?
06/11/12 Company Note
US Chemicals – Sifting through the rubble
06/04/12 Company Note
Global Chemicals – Dissecting the “sell in May” effect
05/14/12 Industry Note
US Chemicals – Déjà vu all over again? Fundamentally not!
05/09/12 Industry Note
Global TiO2 – Ilmenite not a party spoiler
04/23/12 Industry Note
US Chemicals – Propane to limit ethane pricing upside
04/16/12 Industry Note
US Chemicals – Consensus bar low for Q1’12
04/09/12 Industry Note
MENA Chemicals – Consensus overly bullish for Q1’12
04/02/12 Industry Note
US Chemicals – To risk or de-risk?
01/16/12 Industry Note
US Chemicals – Propylene prices bottoming
01/09/12 Industry Note
US Chemicals – Prefer commodities and special sits in 2012
01/04/12 Industry Note
MENA Chemicals – Identifying winners for 2012
12/05/11 Industry Note
Global Chemicals – How special are specialties?
10/24/11 Industry Note
US Chemicals – An ethane pricing bubble?
10/18/11 Industry Note
Global Chemicals – Expecting a decent quarter
09/30/11 Industry Note
US Chemicals – Have we hit a floor yet?
07/18/11 Industry Note
US Chemicals – Currency tailwinds ahead?
07/11/11 Industry Note
Global Chemicals – Expecting another solid quarter
07/05/11 Industry Note
US Chemicals – Bottoming prices, rising shares?
01/10/11 Industry Note
MENA Chemicals - Expecting further outperformance in 2011
01/03/11 Industry Note
Global Chemicals – Ample room to run in 2011 and beyond
12/06/10 Industry Note
US Chemicals – Explaining enhanced ethane economics
11/29/10 Industry Note
US Chemicals - A peek at the peak
07/26/10 Industry Note
Secular shifts from shale
07/19/10 Industry Note
Expecting broad based earnings strength in Q2'10
07/12/10 Global Chemicals
Global Chemicals - Bullish on ethane based economics
06/28/10 Industry Note
US Chemicals: Currency headwinds ahead?
06/21/10 Industry Note
Global Chemicals - Cyclical and secular growth from autos
05/25/10 Middle Eastern Chemicals Industry Note
Sifing through the rubble and finding opportunities
05/18/10 Industry Note Industry Note
Global Chemicals - The China Effect
05/10/10 US Chemicals Industry Note
Could the capacity addition wave be a whimper
04/26/10 Industry Note
Middle Eastern Chemicals
04/19/10 Industry Note Industry Note
Expecting broad based earnings strength in Q1
03/03/10 Global Chemicals Industry Note
Chemical Sector M&A
02/24/10 Middle Eastern Chemicals Industry Note
Mixed feed, mixed economics, mixed sentiment
02/16/10 Industry Note Industry Note
To LNG or not to LNG
12/16/09 Industry Initiation
Global Chemicals – The time is now!