Set ‘Em Up Joe – Commodity Chemicals Fell Off the Wagon in 4Q24; Intervention Needed for A Better 2025

Daily Chemical Reaction

Set ‘Em Up Joe – Commodity Chemicals Fell Off the Wagon in 4Q24; Intervention Needed for A Better 2025

Key Findings

• General Thoughts: US commodity chemical equity values slid lower in 4Q24 with market fundamentals, notably underperforming the chemicals sector and overall market in 2024 – we provide our views of 1Q and full-year 2025.
• Supply Chain/Commodities: The global restructuring needed to tighten most chemical markets significantly in 2025/26 will require conditions to worsen notably relative to expectations in the near term rather than improve.
• Energy/Upstream: We discuss the Kinder Morgan Mississippi Crossing Project, the growing demand for natural gas from upcoming power projects suggested by growth plans at Entergy, and global oil and gas market views.
• Sustainability/Energy Transition: Walmart adds to a growing list of companies likely to miss their emission reduction targets, citing probable energy policy, infrastructure, and affordable low-carbon technology obstacles.
• Downstream/Other Chemicals: The Baltic Exchange Dry Index fell to a YTD low last week, suggesting the curtailed trade of dry bulk goods, despite news of some US importers hoarding products ahead of potential Trump tariffs.

Exhibit 1: US commodity chemical equities have significantly underperformed the chemicals sector & market in 2024. While many 2025 troubles appear generally anticipated, we await earnings estimate cuts to get more constructive.

Source: Bloomberg, C-MACC Analysis, December 2024

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