Sitting Still Should Not Be an Option – Global Feedstock Competition to Intensify, Chemical Cost Curves to Adjust

Companies Mentioned: SABIC, LyondellBasell, Sipchem, Aramco, Sinopec, Dow, Nova, Borealis, ENEOS, Petronas, LSB Industries, Yansab, Orbia, Jiutian Chemical, QatarEnergy, Covestro, Braskem, ONGC, Enterprise Products, Invista, Pinnacle Polymers, ExxonMobil, Shell, BP, Chevron, Phillips 66, Woodside Energy, TechnipFMC, Trafigura, First Solar, Berry Global, SunOpta, RES, Talon PV, Goldwind, Nel, TotalEnergies, Mitsubishi Electric, Mercedes-Benz, Forward Air
Commodities Mentioned: Ethylene, Propylene, Benzene, Ammonia, Methanol, Polymer Grade Propylene, Crude Oil, Natural Gas, LNG, Silicon, Polysilicon, rPET, Hydrogen, Solar

Key Findings

General Thoughts: Global ethylene market oversupply is resulting in the restructuring and closing of some high-cost capacity, but strategic activities to source cheap feedstock and many capacity additions remain in motion.
Supply Chain/Commodities: We discuss the SABIC 4Q24 results, its planned petrochemical complex targeted to begin production in China in 2026, and the February US polymer-grade propylene contract settlement.
Energy/Upstream: We discuss Shell’s 2025 LNG outlook, which is more optimistic about long-term LNG demand than its 2024 outlook, and we highlight movements in European and Asia natural gas prices relative to USGC levels.
Sustainability/Energy Transition: Chinese solar power additions are poised to slow YoY in 2025, partly due to grid constraints, but will still dwarf additions elsewhere, and we frame the oversupplied setting in solar equipment.
Downstream/Other Chemicals: We highlight recent movements in the Chinese Yuan relative to the US Dollar, as it is near relative multi-year lows that we view, along with falling freight rates, as positive for Chinese exports.