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ExxonMobil chemical earnings more than doubled on year in Q2

Highlights

Exxon reported $1 billion loss for quarter

Strong demand for durable PE packaging, medical

Houston — ExxonMobil's chemical segment earnings more than doubled in the second quarter compared to the year-ago period, bolstered in part by a 2% increase in demand for polyethylene, a resin used to make some of the world's most-used plastics, a top executive noted July 31.

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Demand was strong for polyethylene used for plastic packaging and medical needs, such as masks and gowns, Senior Vice President Neil Chapman during the company's second-quarter earnings call.

However, demand for PE used to make more durable goods, like pipes, is "very very different," he said.

"Overall, we see strong demand for products that are going into packaging, medical; weaker demand for products that go into auto and construction," Chapman said.

Exxon reported a $1 billion loss for the quarter compared to a $3.1 billion profit in the year-ago period, driven by the crash in crude oil prices and sharp declines in refined fuel demand. The chemical segment, however, reported a $467 million profit in Q2, more than double of its $188 million profit in the second quarter of 2019.

On April 9, the spot US HDPE blowmolding export price fell to the lowest level since S&P Global Platts began assessing it, after sources said pricing from suppliers trended lower amid weaker consumer demand.

The FAS Houston HDPE blowmolding price fell $33 day on day April 9 to $618-$640/mt (28-29 cents/lb), with railcar pricing discussed at 25-26 cents/lb, the lowest pricing recorded since Platts started assessing it on October 17, 2011. The FAS assessment includes an additional 3 cents/lb to cover packaging and transportation costs.

The previous low on record for HDPE blowmolding was a 29 cents/lb rail car basis assessment that was unchanged from December 4, 2019 through January 6, 2020.

PE pricing mostly trended in the low-to mid-30 cents/lb rail car in 2020, but during the months of March and April pricing began to fall into the 20s cent/lb after consumers halted purchases of non-essential items and players foresaw a weak outlook due to the coronavirus pandemic, a trader source said.

Meanwhile, ExxonMobil Chemical, Formosa Plastics USA, Dow Chemical, Chevron Phillips Chemical and LyondellBasell's subsidiary, Equistar Chemicals plan to implement 5 cents/lb increase on all their grades of polyethylene resins sold in the US as of August 1, the companies have told customers in letters mid-July that were seen by S&P Global Platts.

The companies were not available for an immediate comment on the proposed increases.

The new cost will be in addition to previously announced price increases for all their PE resins, the letters said.

However, in recent weeks, pricing has increased to pre-pandemic levels as the market continues to see international countries reopen their economies and have demand grow. The demand domestically has picked up as sources have noted a push from a list of producers to increase pricing for their US PE resins.

On July 29, Platts assessed week on week US spot export pricing for low-density polyethylene $11 higher at $992-$1014/mt FAS Houston, linear low-density polyethylene up $11 at $794-$816/mt FAS Houston and high-density polyethylene blowmolding flat day on day at $827-$849/mt FAS Houston.