Waiting on the World to Change – The Unprotected Sit “Tariffied” As Oversupply Risks Rise; Early 1Q25 Trends Mostly Weak!

Companies Mentioned: RPM, Navigator Holdings, Enterprise Products, Nayara Energy, Rosneft, Gail, Bharat Petroleum, Adani Petrochemicals, Chemplast Cuddalore Vinyls, DCM Shriram, DCW, Shin-Etsu, Formosa Plastics, Occidental, Westlake, EPIC NGL, Yulong Petrochemical, Phillips 66, Chevron Phillips Chemical Company, EPIC, Constellation, Calpine, Chevron, Aramco, Sonatrach, Shell, Gevo, LyondellBasell, Ascend Materials, SK Energy, Ineos Styrolution
Commodities Mentioned: Ethane, Ethylene, Polyethylene (PE), Polyvinyl Chloride (PVC), Naphtha, EDC (Ethylene Dichloride), Natural Gas, NGLs, LPG, LNG, Gasoline, Crude Oil, Hydrogen, Fuels, Oil, SAF (Sustainable Aviation Fuel), Polypropylene, Polystyrene, Recycled Materials

Key Findings

General Thoughts: Global average chemical and refining margin moves in 4Q24 mostly resemble those shown in Shell’s business update – weaker-than-expected 1Q25 trends are the significant 4Q result reporting season risk.
Supply Chain/Commodities: We discuss the announced development of another ethylene production unit in India based on imported ethane, which plays a role in India’s effort to build out its domestic petrochemical industry.
Energy/Upstream: We highlight the Phillips 66 acquisition of EPIC NGL assets, including pipeline and fractionation assets, as part of a trend to lengthen product value chains and bring low-cost products to higher-cost markets.
Sustainability/Energy Transition: We further discuss SAF use mandates going into effect in the UK and Europe, EU imports of SAF from Asia, what it says about European industry, and flag the airlines most likely impacted.
Downstream/Other Chemicals: The recent strength in the US Dollar relative to the Chinese Yuan and other major foreign currencies is a headwind for US product competitiveness in global markets that has worsened in 1Q25.