Just When You Think You Are Out
They pull you back in
Hey there,
I’m a bit pressed for time these days, but I did notice that the July inflation print was essentially flat so maybe we have hit the peak and we are headed down the hill? I take this to be a good thing. When I was deep into the supply chain pricing and availability crisis there was forecasting that predicted the second half of this year would be better and this might be true.
Oil prices have been falling for weeks and consequently the indexes for important commodity chemicals are also falling such as benzene, ethylene, and propylene. I expect most chemical companies to try and delay bringing prices down for as long as possible with a lot hand waving trying to deny that prices are falling. The longer chemical companies can keep their prices high as feed stock prices fall the more profit they can extract from their customers. I expect this to take about 6-9 months to get worked out.
Overall, I think this is great and hope to see more of this coming. I’ve heard of numerous companies on hiring freezes right now (no layoffs that I’ve heard of yet in chemicals), but where there is a freeze a layoff could be lurking in the darkness. I guess we will find out more as the Q2 numbers really come in.
Sounds great right? But just as you think we’ve gotten out of this mess the weather decides to pull us back in.
Rhine water levels are hitting the late summer lows and this means shipping chemicals by barge is going to be a problem. Expect more headaches here. In the US our western states are essentially in a water crisis and while this doesn’t create a shipping emergency in chemicals I think there will be some headaches happening with people not having enough water. Even if it does rain that rainwater might have some PFAS in it too. I’ll need to do a longer post on PFAS, but there is more to the story than just Teflon. Polymer coated paper that is grease resistant has also been a big source of PFAS end-use. Yes, sometimes paper isn’t always better than just regular plastic. We should try and base our decisions on science and good design working together as opposed to feelings of “doing good” by getting paper packaging for everything (polymer coated paper is NOT RECYCLABLE!). Paper is not the answer to everything.
If seasonal rains come back in Germany I suspect Europe will be OK in the barge shipping department, but there is still the lingering question around natural gas supply, trying to transition off it’s use in certain areas, and the upcoming crude oil embargo set to take place at the end of the year. I’d like to think these things will get figured out in the next 5 months, but it’s not a lot of time to try and transition away from how things have been for the last 75+ years. I think liquid petroleum gas might be a good temporary stop gap (I see you Evonik), but imported energy is going to keep going up.
I guess we will just have to wait and see.