Weights & Measures – Moderating End-Product Prices to Hurt Supplier Margins; Can Capacity Meet Surging Power Needs?

Key Findings

General Thoughts: US wholesale good price inflation is slowing, and the global consumer push toward cheaper goods is underway, which we view as unfavorable for margin improvement in many chemical chains in 2H24.
Supply Chain/Commodities: We discuss recent strength in copper prices, announced technologies, and capacity growth in critical minerals to lift supply, as well as consensus views for tightness to favor oversupply in some areas.
Energy/Upstream: US power capacity additions will likely set a record in 2024, with most of the additions being in wind and solar. However, capacity growth through 2030 appears likely to struggle to meet the demand surge.
Sustainability/Energy Transition: We discuss the anti-ESG movement in the US and its developments across a few states, and we view perceived issues with project incentives and permitting as unfavorable for energy transition.
Downstream/Other Chemicals: US and Europe interest rates surged post-COVID relative to China, and we discuss the potential for falling Western rates to stoke consumer demand and a likely push toward cheap Chinese goods.