The Value Awakens: Dow Further Unlocks Value to Drive Growth; The Force Is Strong in Packaging Consolidation

Daily Chemical Reaction

The Value Awakens: Dow Further Unlocks Value to Drive Growth; The Force Is Strong in Packaging Consolidation

Key Findings

• General Thoughts: We view the Dow and Macquarie USGC partnership as a “win, win” for both, though their situation is unique, and discuss why global chemical industry efforts to unlock value and restructure are rising.
• Supply Chain/Commodities: Western integrated spot polyethylene (PE) production margins have fallen to a YTD low relative to Asia, and we discuss why a global surge in PE prices in 2025 is unlikely absent unplanned events.
• Energy/Upstream: Global natural gas prices have risen MoM, and a volatile December is likely. However, prices in Europe and Asia are much higher than in North America, benefiting North American energy and chemicals.
• Sustainability/Energy Transition: We discuss corporate clean-energy power purchase agreements (PPAs), where momentum looks to be slowing after substantial growth in 2023, and challenges facing green product economics.
• Downstream/Other Chemicals: We discuss the Novolex acquisition of Pactiv Evergreen, further supporting the consolidation trend in the packaging industry, as it follows the Amcor and Berry Global merger notice last month.

Exhibit 1: Dow unsurprisingly flags the lack of “strong” macro conditions across its portfolio at a recent investor event, and our cautious 2025 petrochemical view suggests more global sector asset-level strategic activity on the horizon.

Source: Dow – December 3, 2024 Investor Presentation

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