For the second half of 2024, the automotive industry is seen as a major demand driver for nylon resins globally, especially nylon-66, with an indirect impact on upstream feedstocks cyclohexane, adipic acid and caprolactam.

In mainland China, demand for nylon-66 resins, especially from the automotive sector, was subdued in the first five months of 2024 but industry participants see better days ahead in H2. According to a China-based buyer, Q4 is the peak season for the automotive industry as many manufacturers catch up with their production targets during this quarter.

S&P Global Mobility expects further export gains to provide the main positive effect for mainland China’s automotive industry, forecasting higher production levels in Greater China for 2024 over 2023, up 2.3% at 29.7 million units. Also, China’s EV sales continue to expand rapidly both domestically and abroad.

The supply overhang that began for global polyethylene markets in the first half of 2024 is expected to extend into the second half of the year, as several chemicals makers prepare to bring new capacity online in one region while another region will rationalize its output, according to an S&P Global Commodity Insights analysis.

Global virgin PE capacity is expected to exceed demand by 30 million mt/year in 2024, according to S&P Global Commodity Insights. The long supply will be exacerbated by new plant startups in China in Q4.

PE resin from the US and Asia has been consistently more competitive in global export markets in 2024 to date, with the former region’s producers targeting around 50% of their material for export according to market feedback.

The global methanol market could be characterized by the ongoing supply-demand imbalance continuing across the second half of 2024, with improving consumption, especially in the Americas, offset by supply growth if projected expansions come online.

“There is probably limited uptick we foresee in the immediate future as production is anticipated to improve in both Iran and Asia, with existing and new capacities (Sarawak Methanol and Methanex’s Geismar 3) expected to target Asia,” said Olivier Maronneaud, global lead for methanol and plastics circularity at S&P Global Commodity Insights.

European ethylene looks set to struggle with persistent poor market conditions across the second half of 2024, amid expectations of continuously structural weak demand and supply length against a backdrop of a weak macroeconomic and volatile geopolitical environment.

As anticipated ahead of 2024, domestic rationalization is set to begin in the second half of 2024. ExxonMobil and SABIC are set to shut their crackers located in Gravenchon, France, and Geleen, the Netherlands, with an annual ethylene capacity of 425,000 mt and 530,000 mt, respectively (see infographic).

However, according to market sources, the total lost capacity of the two cracker closures would not be enough to significantly affect market conditions amid structural length.

Chemicals shipping companies and traders are expecting the liquid chemicals freight market to be stable to firm in the second half of the year amid trade flow disruptions even though movement of ships through the Panama Canal has increased, sources said in May

"I guess [the] market stays tight, but we saw more vessels crossing Panama, which would make the market softer later," said a trader that frequently ships benzene and other chemicals from Northeast Asia to the US Gulf.

With the May-December rainy season in Panama, the Panama Canal Authority has said it would increase the number of ships allowed to pass through the canal, S&P Global Commodity Insights reported earlier. Canal transits have been restricted since November due to a severe drought

Recycled polymer market participants see a mixed picture globally for the second half of 2024, with diverging levels of regulatory pressure and variable demand expectations continuing to hamper development of the sector across regional markets.

Players in US recycled plastics markets are tentatively optimistic heading into the second half of the year, citing voluntary targets from some brand owners and mandates which aim to increase recycled content in plastic packaging, potentially pushing demand levels higher in the latter half of 2024 and into 2025.

Despite this, ongoing macroeconomic headwinds continue to limit consumer expenditure, which alongside external factors impacting US domestic market fundamentals has dampened any expectation of wholesale demand recovery.

The global benzene market will likely see demand uncertainty in the second half of 2024 as market participants struggle to find any clear cues. Amid the ongoing downstream capacity expansions, China stands out as a key market for benzene demand, whereas styrene capacities in the US remain resilient given their feedstock advantage.

In Asia, prices are projected to remain bolstered in H2 2024 due to a lack of new capacities while derivative capacities are expected to continue expanding. A poor macroeconomic outlook, however, will likely weigh on China’s domestic consumption of benzene derivatives.

Moreover, as new Chinese downstream capacities pressure margins for producers globally, trade barriers in the form of anti-dumping duties will curtail export demand for Chinese benzene derivatives, limiting demand in the biggest consumer country in the world, the US.

Global demand for phenol and acetone is set to remain low in the second half of 2024 amid weak buying interest across the chain and sufficient product availability in Asia and Europe, while supply in the US acetone and methyl methacrylate markets is likely to be tight.

The Indian phenol market is likely to remain well-supplied, with prices highly susceptible to the upstream benzene cost, market sources said.

Phenol demand from the downstream laminates and phenolic resin segment is expected to remain stable to weak, slightly pressured by soft demand from the agrochemical sector. Supply-wise, strong availability from the domestic and international markets is likely to keep Indian inventories healthy and prices under pressure.

After the challenging first five months of 2024, participants in the Asian paraxylene market are gearing for more pain in the second half, as top consumer China battles growing domestic inventories along with higher production, while global demand recovery remains nascent.

Asian PX prices averaged at $1,031.72/mt CFR Taiwan/China marker so far this year, recovering from a year-to-date low of $1,001/mt reached on May 14, according to Platts assessments by S&P Global Commodity Insights. However, prices remained below the January-May 2023 average of $1,045.29/mt.

Market participants in Asia were hopeful of a strong first-half on gasoline blending demand ahead of the US summer driving season.

European chemical market sources expect to see its lagging economy kickstarted by at least one interest rate reduction in the next couple of months, and hope to see that provide a boost for lagging chemical demand. The macroeconomic view of Europe contrasts with that of the US economy, which appears to be motoring along.

In Europe, inflation for April was stable at 2.4% and the eurozone’s key interest rate remains at 4%, while in the US, inflation sat at 3.4% and the US Federal Reserve bank rate at 5.25-5.5%, the highest level in more than a decade, according to EU and US government data.

Unlike in Europe, the US Fed was expected to hold interest rates or even raise them to cool the economy.