When The Levee Breaks – Flood Warnings Already High Downstream, Western Chemical Markets Could Be Next

Key Findings

General Thoughts: Surging freight rates between China and Western markets benefit Europe relative to Asia Ex-China chemical producers but could set the stage for weaker-than-expected Western profits ahead.
Supply Chain/Commodities: We discuss the potential for more near-term ethylene and commodity chemical capacity closures and restructuring efforts across parts of Asia amid oversupply and still tepid regional demand.
Energy/Upstream: We highlight rising electricity demand, keeping coal in the production mix, and the growing reliance on natural gas, as most electricity producers are set to struggle to keep up with increasing demand.
Sustainability/Energy Transition: We highlight why the recent issues at Fulcrum BioEnergy are not surprising to us, the challenges of scaling reactor vessels, and provide more general thoughts on SAF market developments.
Downstream/Other Chemicals: We discuss European (& US) chemical producers facing risk from downstream trade as low-cost products from China benefit Western consumers but to the detriment of its industry.