Applause Before The Flaws – Olin Value Strategy Benefits Peers, US LNG Permit Pause Is Troubling

Companies Mentioned: Olin, Westlake, Formosa, Shintech, Oxy, Dow, ADM, BASF, Evonik, Hexpol, Linde, Lonza, PPG, LG Energy Solution, Sasol, Freeport LNG, Glenfarne, CNOOC, Shell, Sunoco, NuStar Energy, Aramco, ADNOC, Covestro, Braskem, Baker Hughes, BP, Elkem, NextEra, Equinor, Orsted, Yamaha, Zara, Ador Group, HSBC, Lhyfe, Eversource, Umincorp, Honda, Hyzon
Commodities Mentioned: Polyvinyl Chloride (PVC), Ethyl Acetate, Benzene, Copper, Lithium, Crude Oil, Natural Gas, Coal, Hydrogen, Ammonia, PE, PA6, R-PET, Carbon

Key Findings

General Thoughts: We discuss why commodity producer efforts to increase prices with operating rate cuts in low-cost markets as a short-term solution, as it emboldens peer production upticks and spur growth investments.
Supply Chain/Commodities: We discuss Olin 4Q results and earnings call takeaways and why its strategy benefits more integrated peer Chlor-Vinyl producers, such as Westlake, and flag weak early-year Asia chemical markets.
Energy/Upstream: We highlight strength in Brent Crude oil relative to US natural gas, but weakness in Ex-US natural gas relative to the US, and generally discuss the Biden administration pause on new LNG export permits.
Sustainability/Energy Transition: The pause of new US LNG export permits is being applauded by climate activists, but carbon emissions (not natural gas) are the issue and US permit uncertainties/delays remain a broader issue.
Downstream/Other Chemicals: Despite weakness in European natural gas and strength in some of its commodity chains, due to Middle East issues, ifo data shows many European manufacturers still face troubled conditions.