Market Structure Matters – The Ethylene Industry Should Take Note

Consolidation within the US architectural paint industry may have contributed to the industry’s ability to hold on to price increases achieved during COVID and supply chain issues, and margins look healthy.
We noted this week the contrast between Sherwin Williams’ results and AkzoNobel’s – with the US market in much better shape than Europe, but part of this is because of a much weaker consumer in Europe.
Better market structures are often mistaken by competition authorities as opportunities to harm the consumer. In many of the chemical and related industries, better structure may today simply mean a way to stay afloat.
Regional consolidation may be necessary in global markets for industry survival and the jobs it creates. The US paint industry is making good returns, as are natural gas-based chemicals – elsewhere, not so much.
Otherwise, we look at reasons to own industrial gas companies and the reason to own corn! We also look at some of the recent moves in LNG, weak electrolyzer demand, and a silly idea from the UN.

Exhibit 1: The US Architectural Paint business has held on to prices and expanded margins – other sectors have not.