Europe, Obviously There’s a Problem!

Key Findings

General Thoughts: We discuss the North American natural gas cost advantage, looking at its North American regional prices relative to Europe and Asia, and we offer further views on European chemical producer challenges.
Supply Chain/Commodities: We highlight Dow’s evaluation of value-optimizing options for its European assets, notably focusing on polyurethanes. We also provide thoughts on European policy and US PE plastic prices.
Energy/Upstream: We highlight the Valero 3Q24 business update, which highlights weak US refinery margins but paints a picture of a better 2025. We also discuss Baker Hughes’ view of demand for energy (natural gas and oil).
Sustainability/Energy Transition: We highlight Neste 3Q24 and its renewable hydrogen project at Porvoo biting the dust and discuss why our confidence in reaching IEA net zero targets for 2030 is low, as it looks unachievable.
Downstream/Other Chemicals: We discuss Dow demand views by region, with no major global markets viewed as “strong”, and we flag strength in US mortgage rates despite hope for their fall to spur housing market activity.

Exhibit 1: On average, natural gas prices in Europe and Asia reflect a significant premium to North American levels.