Monthly Thematic Piece

2020 Hindsight – Some Predictions
January 29, 2020
Products Mentioned:
Ethylene, Polyethylene, Polypropylene and PVC
Companies Mentioned:
Exxon, Dow, BP, Shell, Repsol, DuPont, Formosa
Subjects Covered:
Plastic Waste, ESG, Climate Change, Growth, Energy

In the past we have tended, like many others, to start the year with some predictions, generally stocks to buy and avoid. Given the recent start-up of C-MACC we are a bit late with this one. Also, as this is a freebee, it is more of an appetizer for the themes that we plan to cover in more detail through the year.  While we talk about the issues below in the context of 2020, most have much longer-term stories.

So, in 12 months’ time, as we look back on 2020, there will be things that surprised us. Events, trends, policies, geopolitical maneuvers or shocks, and other triggers that few if any are planning for today. This is always the case, but the Chemical Industry has been relatively lucky over the last 10 years because since the financial crisis none of the unexpected roadblocks or detours have been life threatening (with a couple of isolated exceptions). The goal of this piece is to identify some “left field” issues for 2020 – some of which are not on the radar today and some which are, but which could develop in ways that are unexpected. We will discuss issues/triggers that could make things worse as well as those that could make things better.

Several years ago, we took a unique approach to a project feasibility study for a client, where instead of looking at scenarios (low oil, high oil, low growth, high growth etc.), we were asked to identify scenarios that would make the investment look like the most foolish of corporate decisions. The goal was to brainstorm what could go horribly wrong. We have employed this approach positively and negatively in the analysis that follows.