Shell’s chemicals margin
Royal Dutch Shell’s (RDS.A) chemical segment closely tracks the US ethane, Western European naphtha, and Northeast-Southeast Asia naphtha margins. Tracking these markers can point toward the company’s expected near-term margins.
In 1Q16, US ethane margins fell by 31% over 1Q15 to $385 per ton. On the other hand, Western European naphtha margins rose by 30% over 1Q15 to $596 per ton in 1Q16. Northeast-Southeast Asia naphtha margins rose steeply by 82% over 1Q15 to $621 per ton in 1Q16.
Shell’s peers BP (BP), ExxonMobil (XOM), and Chevron (CVX) also have robust petrochemical portfolios that are affected by these cracker margins. The iShares Dow Jones US Energy ETF (IYE) has ~43% exposure to integrated energy sector stocks.