The Pain, The Gain, & Becoming The Same –Energy & Chemical Destinies To Further Merge

Companies Mentioned: Ineos, New Era Helium, RPM, MacDermid, Nippon Steel, SQM, Dow, Mitsubishi, Phillips 66, Pemex, ExxonMobil, Aramco, AltaGas, NestDecade, Prospera Energy Inc., Samsung Heavy Industries, Black & Veatch, CP Chemicals, Aethon, MOL, Yara, Sumitomo Chemical, BP, Electric Era, Heraeus, Ballard Power Systems, Fisker, Solar Edges, Enel, Equinor, Bright Night, Hyundai, Kia, EnerSys, Nikola, Tesla, BYD, Lego, DHL, FedEx
Commodities Mentioned: Crude Oil, Crude Oil, NGL, Benzene, Alkylate, Ethylene, Polyethylene, Polypropylene, Propane, Propylene, Natural Gas, Low Carbon products, EVs, Coal, Hydrogen

Key Findings

General Thoughts: C-MACC Co-Founder Graham Copley will host a webcast to discuss the global ethylene market, likely rationalizations, and the China factor on January 9 at 9 am – click here to register.
Supply Chain/Commodities: Global refinery profitability, on average, has significantly outperformed global petrochemical profitability compared to pre-COVID levels – major strategic shifts in both markets are likely.
Energy/Upstream: We view oil and gas producers as in an enviable position to selectively integrate and extend value chains downstream, shifting global derivative cost curves and putting its non-integrated players at risk.
Sustainability/Energy Transition: We discuss China’s elevated energy transition capex targeting technology and related advancements compared to decarbonizing its industry – the West focuses more on emission cuts.
Downstream/Other Chemicals: We highlight recent US Dollar and mortgage rate movements, flag year-end global food inflation data, and comment on mixed global demand indicators across a few major regions.

Exhibit 1: Global ethylene margins hold near 4Q23 lows at the start of 2024, but refinery margins show improvement.