Trade Wars, Cheap Goods, and Petrochemical Gluts: Weathering 2025’s Global Crosswinds

Western consumer price inflation remains high relative to China. While this trend is relatively favorable for the consumers of Chinese goods, it is unfavorable for manufacturers in the West and many in Asia Ex-China.
Weak Chinese demand and the fact that China is adding more capacity in 2025 suggests more local surplus and low prices that expose high-cost producers in Japan, S. Korea, and Taiwan, with ripple effects flowing to Europe.
The risk for North America is that export demand weakens without more aggressive prices aimed at driving more immediate shutdowns, and it will be challenging to do this without negatively impacting US margins.
The broader consequence of this setting in 2025 is more export surpluses and deflationary pressure – it favors keeping country-level protectionist efforts and trade disputes, notably between the West and China, in motion.
Otherwise, we comment on global methanol markets, infrastructure projects enabling more USGC LPG exports, our constructive view of corn markets, and highlights from our hydrogen and sustainability reports last week.

Companies Mentioned: Methanex, Celanese, Dow, Invista, Enterprise, Energy Transfer, Targa Resources, Oneok, MPLX, Phillips 66, Nutrien, Corteva, CF Industries, John Deere, CNH, Thyssenkrupp Nucera, BP, Tesla
Products Mentioned: Ethane, Ethylene, Polyethylene (PE), Polypropylene (PP), Methanol, Propane, Vinyl Acetate Monomer (VAM), Polyvinyl Chloride (PVC) Acetic Acid (AA), Ammonia, Corn, Soybeans, Ethanol, Liquefied Petroleum Gas (LPG), Crude Oil, Natural Gas

Exhibit 1: US consumer price inflation (CPI) remains elevated relative to China – a lingering US trade issue.