Daily Chemical Reactions | Sunday Thematic & Weekly Recap

Yes – We Are Going To Talk About Politics – Politics and Corporate Strategy
March 10, 2024
Commodities Mentioned:
Lithium, Copper, Nickel, Ethylene, Propylene, Ammonia, Methanol, Polypropylene, Crude Oil, Ethylene Glycol, RNG, Styrene
Companies Mentioned:
Albemarle, BP, Lotte Chemicals, Indorama, GE Vernova, Bora LyondellBasell, LifeZone Metals, Oxy, ExxonMobil, SABIC, INEOS, Li-Cycle

C-MACC Sunday Thematic and Weekly Recap

Yes – We Are Going To Talk About Politics – Politics and Corporate Strategy

  • Tuning in for a State of The Union this week and momentarily thinking we were watching a game show caused us to think not about political left or right but about how the nature of politics has changed and what it means.
  • The determination in the US to do only what the other guys don’t want would lead to inactivity in a balanced congress, but a congressional majority from either party would bring almost binary outcomes for industry.  
  • We have talked about increased share buybacks for 2024, faced with an uncertain capital investment outlook, but the risk of a Democrat tax on buybacks could accelerate buyback activity this year, just in case!
  • On climate change, we are getting the warmer weather evidence, but political bias may be largely irrelevant for the next several years, with upside-down project economics likely the more significant driver of behavior. 
  • Otherwise, we look at a wider US competitive edge, some strategy rethinks, including at Albemarle, how we might be heading into a nickel and copper shortage, and why biomass and waste might be key for hydrogen.
  • Companies Mentioned: Albemarle, BP, Lotte Chemicals, Indorama, GE Vernova, Bora LyondellBasell, LifeZone Metals, Oxy, ExxonMobil, SABIC, INEOS, Li-Cycle
  • Products Mentioned: Lithium, Copper, Nickel, Ethylene, Propylene, Ammonia, Methanol, Polypropylene, Crude Oil, Ethylene Glycol, RNG, Styrene

Exhibit 1: Global trade continues to expand and is close to $25 trillion in value today. Political changes in 2024 risk upsetting the backdrop that has allowed trade to expand, and this risk should impact corporate strategy.

Source: WTO

There was not a lot of useful commentary following the State of The Union speech this week, but one comment struck home.  In response to criticism that this was not a normal speech and was far more of a campaign launch than anything else, the retort was that we are watching the very nature of politics change in the US (and in some other parts of the world) and that perhaps “normal” is no longer appropriate.  Certainly, to a Brit, the speech had elements of the UK Prime Minister’s question time, with lots of partisan heckling and shouting – but added an element of “dress up”.  We are not taking any sort of political position at C-MACC except to express some dismay that neither party can find a better candidate.  We are, however, very interested in how the changing nature of politics and political risk impacts corporate strategy, which it most certainly must.  While we have started this report talking about the US, one of our larger concerns this year and next, as we have noted in plenty of recent work – see – Risk On? Could 2024 be Another Year of Fear?  – is the more fragile fabric holding Europe together, and here there could be real risk with the US election.  An anti-Ukrainian, anti-NATO, Trump administration, would pile more pressure on an EU that is already finding it harder to get member states consensus on EU plans that look good for the collective but are economically challenging and politically challenging for the member states.  Some of the themes around the CERA conference coming up in about a week, will focus on the European resolve for some of its energy transition goals, in the face of escalating costs and rising political backlash which is driving fringe political parties in Europe into the limelight.

See PDF below for all charts, tables and diagrams


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