Global Market Analysis

The Fast & The Furious: ADNOC’s Strategic Push; Global Chemical Restructuring Efforts Keeping the Gas Pedal Pressed

December 3, 2024

Companies Mentioned: ADNOC, Covestro, Dow, Sadara Chemical, Aramco, LyondellBasell, ExxonMobil, Al Baleed Petrochemical, Lotte Chemical, Orlen, Chandra Asri, Enterprise, Venture Global, Gazprom, Cheniere Energy, Hapag-Lloyd, Pryme, REX American Resources, Clariant, Worldscale Association Ltd, Intercontinental Exchange, Vision RNG, Veolia, Unilever, Nufarm, Genesee & Wyoming, Donaldson, Mastercard
Commodities Mentioned: Ammonia, Ethylene, Methanol, Chlorine, Caustic Soda, Propylene, Crude Oil, Natural Gas, LNG, Carbon, Plastic-Derived Pyrolysis Oil (PPO), Methanol

Daily Chemical Reaction

The Fast & The Furious: ADNOC’s Strategic Push; Global Chemical Restructuring Efforts Keeping the Gas Pedal Pressed

Key Findings

General Thoughts: The restructuring of high-cost global chemical assets and low-cost integration to extend value chains are efforts unlikely to stall anytime soon, putting those “sitting still” in high-cost positions at greater risk.
Supply Chain/Commodities: We discuss the ADNOC launch of a global investment fund to drive growth in low-cost, low-carbon, and chemical production aimed to more than double its asset value during the next decade.
Energy/Upstream: We highlight the recent strength of natural gas in Europe and Asia relative to crude oil and natural gas in the US. We also discuss why global energy and chemical markets are poised to merge increasingly.
Sustainability/Energy Transition: European carbon prices have increased relative to prices in the UK in November, and we discuss views from Hapag-Lloyd and UK efforts to include the maritime industry in its emission controls.
Downstream/Other Chemicals: We discuss recent weakness in global freight rates following their upward push, on average, in early November, and we flag recent China and US PMI postings reflecting some improvement.

Exhibit 1: The US ethylene production cost advantage has recently fallen relative to Europe, while the cost advantage in US Methanol, Ammonia, and Chlor-alkali has relatively expanded due to higher overseas natural gas costs.